Non-Qualified Deferred Compensation (NQDC) Plans operate much differently than other employee benefit plans.  There are numerous considerations for a plan sponsor during the design and implementation phase. Participant balances are reflected as a liability on the organization’s balance sheet, are “at risk” in the event of bankruptcy, and deferral and distribution elections are governed by IRC 409A.  Furthermore, informally funding plan liabilities can be a challenging exercise as there are tax and liquidity concerns that must be addressed

Many organizations rely on their NQDC Plan to retain and retire their most important employees, but rarely revisit and benchmark their initial plan design against the NQDC marketplace or measure the outcomes delivered to date.  Given the objectives of these plans and the employees they target, it is imperative a plan sponsor benchmark their plan design and audit their plan assets every 4 – 5 years.

Wrightwood Advisory has over 30 years of experience in the NQDC industry.  We work with Fortune 500, publicly-traded, and privately-held businesses in all areas of plan governance.  Our team understands the ecosystem of vendors, common pitfalls of a plan sponsor and design, as well as the most efficient funding strategies for NQDC Plans.

Get in touch with a Wrightwood Advisory consultant today!

Insurance Companies face unique challenges when financing employee benefit costs.  To address this problem many insurance companies purchase life insurance on their key employees to help recover these costs as well as hedge against a potential economic loss of an employee.  ICOLI is an accepted and longstanding practice with over $30 billion currently held on over 100 insurance company balance sheets.

ICOLI offers favorable tax and risk-based capital treatment.  Life insurance companies who purchase the asset are assessed a capital charge of 0% with Health and P&C companies being assessed a charge of 5%.  Furthermore, the investable universe has expanded dramatically over the last 10 years.  Illiquid and alternative funds are available to purchasing insurance companies in search of that exposure and return profile.

It is imperative insurance companies follow the guidelines in IRC 101(j) as well as quantify the employee benefit costs they are informally funding with ICOLI.  Wrightwood Advisory works with every issuing ICOLI carrier and asset manager in the industry.  We do not have “exclusive” arrangements with issuing ICOLI carriers or asset managers.  Our objective is to deliver the highest possible outcomes based on the client’s investment thesis and desired return profile.

Get in touch with a Wrightwood Advisory consultant today!

Insurance Companies face unique challenges when financing employee benefit costs. To address this problem many insurance companies purchase life insurance on their key employees to help recover these costs as well as hedge against a potential economic loss of an employee. ICOLI is an accepted and longstanding practice with over $30 billion currently held across over 100 insurance company balance sheets.

BOLI offers favorable tax treatment and may protect against mark-to-market volatility in a bank’s fixed-income portfolio.  The Office of the Comptroller of the Currency (OCC) has provided guidance to banks on how to structure a purchase, who they can insure, and how much BOLI a bank can place on its balance sheet.  Furthermore, the investable universe has expanded and banks can use stable value wrap products to smooth out risk-weighting and return profile.

It is imperative that banks follow the guidelines in IRC 101(j) as well as guidance provided by the OCC.  Wrightwood Advisory works with every issuing BOLI carrier in the industry.  Our objective is to deliver the highest possible outcomes based on the client’s investment thesis and desired return profile. 

Get in touch with a Wrightwood Advisory consultant today!