Attracting and retaining top leadership talent has never been more critical for growing businesses. Salary alone isn’t enough. The best executives are looking for long-term value — benefits that secure their future while rewarding their contributions today.
That’s where Supplemental Executive Retirement Plans (SERPs) fit into the bigger picture of executive benefit planning.
What Is a SERP?
A SERP is a non-qualified deferred compensation plan designed specifically for key executives. Unlike a 401(k) or other qualified plans, a SERP doesn’t have the same contribution limits or participation rules. It’s typically funded by the company, often using corporate-owned life insurance (COLI), and it delivers retirement income later in life.
In plain terms: it’s a customizable way to promise future benefits to your most valuable people — and structure those benefits in a way that keeps them loyal.
How SERPs Fit with Other Executive Benefits
1. Executive Bonus Plans
An Executive Bonus Plan (Section 162) is funded with company dollars, but the executive owns the life insurance policy outright. It’s simple and immediate, but the executive controls the benefit right away.
A SERP, on the other hand, is company-owned and distributed later — often after retirement — making it a stronger long-term retention tool.
2. Key Person Insurance
Key Person Insurance protects the business if a vital leader is lost. It’s about risk management.
A SERP, by contrast, is about rewarding and retaining that same leader while they’re alive and working. Together, they address both “what if we lose them?” and “how do we keep them?”
3. Buy-Sell Agreements
Buy-Sell planning ensures ownership transition if an owner or partner leaves.
SERPs complement this by strengthening the financial security of the executives who keep the company running day to day.
Why Companies Add SERPs to the Mix
- Retention: SERPs can include vesting schedules (“golden handcuffs”) that encourage executives to stay.
- Flexibility: They can be customized for just one or two leaders or broadened for a small leadership team.
- Tax Advantages: Contributions aren’t taxed to the executive until benefits are paid out, often in retirement when tax rates may be lower.
- Balance: SERPs help strike the right balance between immediate rewards and long-term loyalty.
For the Executive: Why It Matters
Executives want more than a paycheck — they want financial security and recognition. A SERP tells your leaders:
- “We value your long-term commitment.”
- “We’re investing in your future.”
- “Stay with us, and this benefit grows with you.”
Bringing It All Together
SERPs don’t replace other executive benefits. They complement them.
- Bonus Plans deliver immediate value.
- Key Person coverage protects the business.
- Buy-Sell planning secures ownership continuity.
- SERPs fill the gap: providing long-term retirement income and a powerful incentive to stay.
At Insureous, we help business owners design SERPs that fit seamlessly into their executive benefit package — creating loyalty, stability, and long-term financial security.
Want to know if a SERP belongs in your strategy?
👉 Schedule a free strategy review to explore how SERPs can strengthen your executive benefit plan.
