SERP 457(f) / Split Dollar Design & Implementation

Security in retirement is both an appealing enticement for senior executives and a powerful tool for credit unions looking to retain, recruit, and reward top talent. By establishing a Supplemental Executive Retention and Retirement (SERP) 457(f) / Split Dollar Program for selected executives, D. Hilton Associates can assist your organization in establishing a solid senior management team. This non-qualified deferred compensation agreement can provide retention incentives and retirement income to select credit union executives in return for attaining agreed-upon objectives, such as financial performance or a specified number of years of service until retirement.

What are the advantages of using a SERP 457(f) / Split Dollar Program?

• Improves retention by rewarding executives for meeting organizational objectives or specific career milestones.
• Enables the organization to follow its succession plan efficiently by allowing its executives to retire at appropriate ages.
• Selective and non-qualified, allowing the financial institution to choose and reward critical executives without contribution amount restrictions.
• Offers a choice of investment management styles within the same contract. The organization can get the benefit, cost savings, and talent of institutional money management. This includes asset allocation, automatic rebalancing, and fund exchanges, without fees or taxes.

Employee Benefits Prefunding

As margins continue to shrink and operating expenses increase, financial institutions face the growing challenge of funding competitive employee benefits that ensure strong retention and employee satisfaction. Employee benefit expenses average 5% growth each year. Benefits prefunding allows financial institutions to direct a portion of their excess liquidity into investments to cover certain employer benefit expenses. Benefits prefunding is permissible by the regulators and can provide financial support for your employee benefits.

D. Hilton can examine your financial institution’s current benefit expenses and establish a benefits prefunding strategy that will support robust benefits packages for your organization’s most important resource: the employees.

D. Hilton’s Benefits Prefunding Process includes:

• Assessment of current benefit expenses, including 401(k) match expenses, employee life and health insurance, long- and short-term disability, defined benefit plan contributions, post-retiree health benefit funding, and SERP 457(f) / Split Dollar non-qualified deferred compensation arrangements.
• Multiple benefit expense forecasts over several timeframes.
• Creation of multiple funding scenarios to illustrate the options and costs for funding the benefit liability.

Ongoing SERP 457(f) / Split Dollar Research Study

The most extensive study of its kind in the industry, the D. Hilton Associates, Inc. SERP 457(f) / Split Dollar Survey collects ongoing data on compensation and succession planning trends for a large portion of the industry. By shining a light on your peer organizations, our SERP 457(f) / Split Dollar Survey can assist your organization in understanding the importance of implementing competitive compensation and retirement packages to retain and reward the executive team.