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SERP Select

Principal SERP SelectSM is a simple, yet flexible defined contribution plan designed to help growing businesses recruit, reward and retain top talent by offering key employees a nonqualified supplemental retirement income benefit. This plan offers benefits for both businesses and C corporation owners.

Designed for companies wanting to benefit one to five key employees, this plan is informally financed with employer contributions and includes complimentary administrative services from The Principal making it cost-effective for the growing business market.

View At a Glance for more details. (PDF) (BB11114)

Target Market

This plan is designed for:

  • C corporations (owners and key employees)
  • S corporations, limited liability companies (LLCs) or partnerships (key employees only)
  • Businesses with strong continuity in place
  • Financially stable businesses (profitable, good cash flow, long history)
  • Owners wanting to benefit one to five key employees
  • Annual contributions of $25,000 - $150,000

This plan is NOT designed for:

  • Not-for-profit organizations
  • Owners of S corporations, LLCs or partnerships
  • Larger cases or situations where the employer is looking for greater flexibility in case design and more robust administrative services

Key Features

Benefits and considerations for the employer

  • Cost-effective tool to attract, retain and reward key employees
  • Can pick and choose key employees and control vesting
  • Plan generally provides tax free key person protection to the company
  • Clear legal and regulatory environment: IRC 409A
  • Employer receives a tax deduction when the benefit is paid

Benefits and considerations for the key employee

  • Simple and easy-to-understand plan design
  • Employer contributions to the plan don't increase taxable income
  • In retirement, it provides employees with additional retirement income
  • Flexibility: No age 59 1/2; no age 70 restrictions
  • During working years, the plan may provide a tax-free death benefit to the family

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