The Five Most Dangerous Trends Impacting Nonqualified Deferred Compensation Plans Post §409A

How to Diversify Your Wealth Accumulation Strategy

Excerpt from a White Paper authored by:

Nonqualified deferred compensation plans have grown a great deal over the last two decades, helping executives defer base salary and annual incentives to save for retirement on a tax-deferred basis. Executives now have huge sums of money in account balances saved for retirement years, yet the economic landscape today is very different than it was when these account balances were deferred.

The purpose of this paper is to enable readers to determine whether these plans remain beneficial for companies and executives, particularly in light of Internal Revenue Code Section 409A legislation, as well as offer potential solutions to five dangerous trends:

1. Unsecured General Creditor Status
2. Reduction in Executive's Cash Flow
3. Possibility of Higher Tax Rates
4. Extent of Access to Benefits
5. Growth in Investment Risk, Decrease in Flexibility

Research indicates that nearly two-thirds of respondents to a recent survey on executive benefits have noted significant amendments to their plans since first adopted. In part, new regulations and legislation arose out of the perceived need for intensified corporate governance. But the net effect is loss of executive control and flexibility under §409A. As a result, executives have to plan differently and re-think their original strategy.

Today's customized retirement plan must withstand many unknowns - from an executive's life span to future capital markets, particularly how inflation rates and taxes will affect withdrawals. What's more, executives should take into account:

• retirement date
• spending needs
• allocation of assets in both personal and tax-deferred accounts
• what portion of retirement income is locked up in deferred compensation subject to employer creditor claims

Bottom line, you need to know the optimal spend rate and asset mix that will generate enough wealth so that your lifespan does not outpace your money. A 65-year old male in 2008 has a 50 percent chance of living beyond 85; and, a 25 percent chance to live beyond 92.

This FREE, comprehensive white paper entitled The Five Most Dangerous Trends Impacting Nonqualified Deferred Compensation Plans After 409A offers workable approaches to legislative restrictions and introduces the new Executive Roth Plan^SM as an alternative to traditional nonqualified deferred compensation plans.

Companies and executives are running out of time to take advantage of new strategies to improve their retirement outcomes. Dr. Laffer and MacDonald urge employers and executives to follow appropriate guidelines of 409A and quickly consider a thorough review of current plans to ensure compliance by January 1, 2009. "There can be no margin for error in meeting final regulations," emphasizes MacDonald.

The Five Most Dangerous Trends Impacting Nonqualified Deferred Compensation Plans After 409A white paper is available at no cost. Please fill out the form below to request a copy of the white paper and it's shorter executive summary.