No one seems to know how many qualified supplemental executive retirement plans (QSERP) are out there or how the economic downturn affected the plans.
Charles Jeszeck, a director at the U.S. Government Accountability Office (GAO), writes about the lack of information about QSERPs in a QSERP report prepared for members of the U.S. House Ways and Means Committee.
Federal tax laws encourage pension plan sponsors to provide benefits for rank-and-file workers by penalizing plans that appear to be discriminating excessively in favor of highly compensated employees.
Pension consultants can create a QSERP by determining how much a pension plan can allocate to executives without violating the antidiscrimination rules, then allocating a sum up to that amount to specified executives.
Some companies and executives prefer the QSERP approach to the traditional non-qualified executive benefits plan approach because it minimizes tax payments and maximizes Pension Benefit Guaranty Corp. benefits protection, Jeszeck says.