The employer buys the insurance policy, pays the premiums, and has access to its cash value. The employee receives supplemental retirement income paid for through the insurance policy. Once the employee receives income in retirement, that benefit is taxable. At that point, the employer receives a tax deduction.
Besides, is a supplemental retirement plan a pension?
Supplemental Executive Retirement Plans (SERPs) can act as the sole retirement plan for executive employees, or act as a supplement to a more-typical qualified plan, such as a pension. Qualified retirement plans, including a 401(k), have annual contribution limits.
Hereof, what is a supplemental benefit plan?
Supplemental benefits products are insurance policies that provide financial protection against expenses associated with accidents or illnesses not covered by major medical insurance.