What Is A Salary Continuation Agreement

A wage management plan is an agreement describing how an employer reacts when a worker is disabled. The plan could define different approaches, such as. B the retention of the employee in the company`s staff, the reduction of the employee`s liability and the maintenance of their current salary. A salary replacement plan is a business-sponsored benefit, which is normally intended to replace an executive`s income in the event of death, retirement or disability. The performance plan is excluded from ERISA and must be limited to a select group of high proportions of people. Because it is excluded from ERISA and constitutes an unqualified benefit, the company can decide which executives participate and how much they receive. For example, the CEO could have 100% of his salary replaced by the plan, while other executives could replace a smaller percentage of their income. In addition, the company may have an obligation of “years of service” before management is entitled to the service. Unlike a deferred compensation plan, this type of benefit is fully funded by the company. 1. Unskilled wage replacement plans are relatively easy to implement and easy to understand.

2. Wage growth plans are excellent tools that companies can use to retain and reward key executives. 3. The entity can selectively select plan participants. 4. Vesting calendars can be used effectively to “engage” important executives. 5. Plans are flexible and costs can be recovered. An employer is not necessarily the one who should make that decision.

A third-party director, such as Z. Spooner, should always conduct an actuarial analysis of whether continuing treatment is a good option for each claim or not. In this way, the employer knows that he is making the right decision for the well-being of the company, including himself and his employee. In the event of retirement, disability, death or separation from the company, the general manager or beneficiary receives the benefit specified in the agreement. Any benefit received by the key man is taxed as a normal income. The company receives a tax deduction at the time of payment of the maintenance of the salary.

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