What’s the tax implication of your executive benefit program?

Now that tax season is upon us, here are a couple of questions for you to consider regarding executive benefits at your company:

1. Do you get them at all?
2. If so, does your company contribute to them?
3. Are you contributing to them?
4. What are your tax implications?

As forehead-smackingly dumb as Question #1 may seem, not every company offers executive benefits. But “in 2007, with new requirements from the Securities and Exchange Commission mandating that companies disclose the value and change in value of their executive benefits plans, it will be even more important to know where a company’s benefits practices stand in relation to those who the company competes with for key talent,” said [Ward] Russell, [President of The Todd Organization], an executive benefits consulting firm.

The Todd Organization “reviewed proxies and other financial disclosure documents to determine the prevalence of executive benefits at 276 publicly-held companies which are headquartered in the United States. All of these companies were selected as America’s Most Admired companies by Fortune Magazine in 2006.” And here’s what they found:

92% of companies offer one or more nonqualified benefit plans

86% of companies offer voluntary deferred compensation programs

81% make at least one company contribution to a nonqualified benefit plan

64% offer one or more supplemental executive retirement plans (SERP)

And it’s a safe bet the number decreases as you get off the Most Admired list.

Now, to the final questions: What are you contributing, and what are your tax implications? Check with your tax professional to be sure – that’s the advice I have to give, regardless of the fact that I’m about to spout off some tax-related advice – but you still have time to make contributions to your retirement plans for the 2007 calendar year. Where do you put your money? In a Roth, a SERP, or some other fund?

The answer’s going to depend on the number you want to appear on your 1040 – or the number you want to get below, in order to hit a different tax bracket. Pay for a tax pro. Speaking from experience, it’s the best thing I did for the last eight years or so.

And if you’re not getting those executive benefits? Russell’s quote suggests you could do well if you started discreetly looking for a new opportunity.

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