According to the Congressional Research Service, the Code provisions under ERISA Title II "require plans to cover rank-and-file workers, and they include 'nondiscrimination rules' that prohibit qualified plans from favoring highly-compensated employees
with respect to eligibility or benefits" (Summary of the Employee Retirement Income Security Act, p.
It ensures that highly-compensated employees can maximize their pre-tax contributions to the plan; and
And their failure to prepare for retirement can interfere with the retirement planning of the highly-compensated employees, called HCEs and defined as those who own at least 5 percent of the company or earn $115,000 or more in 2012.
Remember, under the right circumstances, the safe harbor 401(k) plan is a win for the employer, highly-compensated employees and, last but not least, non-highly compensated employees.
Benefit caps: Group LTD plans typically have benefit caps based on more moderate income levels, which may limit the amount of income replacement more highly-compensated employees can receive.
To combat these misperceptions, carriers should provide education tools such as pre-enrollment communications and personalized enrollment kits or secure online enrollment tools to help highly-compensated employees understand their current income replacement and the necessity of IDI.
Offering individual disability insurance allows an employer to either reduce the benefit maximum on group LTD plans with high maximums (risk transfer) or maintain their current maximum and not increase the group LTD benefit maximum (risk mitigation), which reduces the impact on the employer of claims from highly-compensated employees.
However, employers should look for a carrier that can tailor a supplemental long-term disability solution for more highly-compensated employees that best complements the group LTD disability offering--and can back that up with other strong service attributes that include implementation, administration and enrollment with a keen focus on superior claims service.
In addition to addressing its fiduciary obligation, the employer will benefit from a more financially stable and educated workforce, may gain flexibility in structuring retirement benefits for highly-compensated employees
, and can enjoy some emotional gratification for its foresight as a good corporate citizen.
NEW YORK -- A recent MetLife employee benefits trend study revealed that, surprisingly, many highly-compensated employees (those making at least $75,000 per year) have not done adequate life insurance planning.
Highly-compensated employees can benefit from an enhanced, permanent life insurance program that combines life insurance protection with an optional tax-advantaged investment opportunity.
For example, permanent life insurance, such as Group Variable Universal Life (GVUL), can be a benefits solution for highly-compensated employees because it has the flexibility to solve a number of financial problems.