Innovative Solutions for Executive Benefits
With the advent of 401(k) plans, much of the responsibility for retirement savings has been shifted by companies to their employees. 401(k) plans are highly effective for most employees, but IRS limits on contributions and eligible compensation, in addition to non-discrimination testing, make them less attractive for highly compensated executives. The following hypothetical example demonstrates how these limits can prevent a highly compensated executive from achieving the same proportionate retirement benefit as other employees.