Deferred Comp - Defined Benefit
The Principal® Deferred Comp - Defined Benefit plan allows employers to provide a supplemental retirement benefit to select key employees in excess of qualified plan limitations on a pre-tax basis. It can help bridge the retirement income gap that highly compensated employees (HCEs) often face with qualified employer retirement plans.
Employers can design the plan to provide discretionary incentive benefits to recruit, retain and reward valuable key employees.
View Employer Summary (BB9185) to review the benefits and considerations of this plan for plan sponsors and participants.
Target employers that display most of the following attributes:
- Business entity (public/private C corporations are best, pass through entities for non-owners also an option)
- Strong business continuity
- Strong financial situation (profitable, good cash flow)
- Highly compensated employees with retirement income gap and/or income deferral needs
- Willingness to provide a solution for key employees
For Plan Participants
- Participants have the opportunity to accrue benefits above the IRS qualified retirement plan limits and/or provide supplemental benefits to help meet retirement goals.
- Participants are not required to make contributions and do not bear the investment risk of the benefit.
For Plan Sponsors
- Flexible plan design and multiple financial options available.
- Assets accumulated to finance the plan remain an asset on the company’s balance sheet.
- The plan is simple to administer and requires no annual enrollment, discrimination testing, minimum participation or Form 5500 filing, if set up properly.
Deferred compensation plans are unfunded contractual obligations to pay benefits to a plan participant in the future. The employer can choose to informally finance the future obligation or leave the obligation unfinanced. The best financing method is dependent on the employer’s financial characteristics and the degree of risk that is acceptable to plan participants and the employer.
Financing and Investment Capabilities Brochure (BB9784)
Demonstrates the ability of Principal to help clients simplify the financing and investment aspects of their deferred compensation plans.
View (PDF) • Order
For those employers choosing to informally finance the plan, most offer a range of investment options and allow their plan participants to choose reference investments among multiple fund families and money managers. This allows plan participants to choose reference investments that fit their specific objectives and risk tolerances.
Investor Profile Quiz (BB9671)
Give this to plan participants to help them determine the reference investments right for their risk tolerance. Order a printed version, or use the "fillable form" PDF by selecting View.
Principal LifeTime Portfolios for NQDC Plans Brochure (LV283)
Show plan participants how Principal LifeTime Portfolios can take care of asset allocation and diversification decisions.
Key sales ideas and success stories below. View all key employee retention and retirement success stories. See other sales approach tools.
Retirement Gap Chart Detail Flyer (BB9605)
Shows the gap between income replacement goals and the benefits received from Social Security and qualified plans. Then discusses how a nonqualified supplemental retirement plan could help fill that gap. Includes annual qualified plan and IRA limits.
Key materials listed below.
Before the Sale
Deferred Compensation Capabilities Brochure (BB9406)
Present the comprehensive plan-level expertise and administrative plan services that Principal® provides for its deferred compensation plan employer clients.
View (PDF) • Order
Business Opener (BB9468C) & Opener PowerPoint (BB11415)
This marketing piece is designed to introduce companies to the Deferred Comp - Defined Contribution plan. Customize the front cover. To create a customized electronic file, select “View” below. To show qualified plan limits, use BB10362.
View Sample (PDF) • Order • View Presentation (PPT)
Access additional sales approach materials.
During the Sale
After the Sale
Services Summary Flyer (NQ3)
Use this tool to show a high-level overview of the comprehensive plan administrative services that Principal provides employers.
Access materials for use in the plan implementation process, including business submission guidelines, participant materials and sample agreements.
Go to Deferred Comp New Business Enrollment
When we use the term “money manager,” we may be referring to an investment advisor or sub-advisor of an underlying mutual fund.
Before investing in mutual funds or variable life insurance, investors should carefully consider the investment objectives, risks, charges and expenses of the funds or the policy and the underlying investment options or online at www.principal.com. This and other information is contained in the free prospectus and, if available, the summary prospectus that can be obtained from your local representative or online at www.principal.com. Please read the prospectus and, if available, the summary prospectus carefully before investing.