Nonqualified Plan Termination
Nonqualified plans offer a valuable way for corporations to supplement qualified retirement plans and reward key executives. However, as companies revisit their benefit programs:
- Many have concluded that their defined benefit plan liabilities are disproportionately large
- Benefit programs inherited through acquisition do not align with current strategies; or
- Economic realities are forcing change
As a result, companies are exploring nonqualified plan termination and settlement strategies. The rules for settling nonqualified benefit liabilities differ extensively from those governing qualified plans. Failure to properly structure nonqualified plan terminations and settlements will result in tax penalties to participants and may have an impact on other corporate plans, both now and in the future. This emphasizes the critical need to partner with a consulting firm that can provide the expertise and support necessary to navigate these complicated transactions.
Aon Hewitt’s Executive Benefits practice is uniquely qualified and experienced to help companies analyze, communicate and implement these complex termination strategies. Our ability to combine consulting services, project management and communications, including “white glove” call center services will provide the full spectrum of internal and external support required to meet the program goal while supporting those plan participants who are impacted by the change.
For more information about Aon’s nonqualified plan termination services, please contact us.