MC Overview - Banks Flashcards
(27 cards)
Plan Design
Plan Design
Ensure flexibility of:
1. Plan features
2. Deferral options- salary, bonus, commission, RSU/PSU in either dollar amount or percentage.
3. Payout options (separation of service, specified date and retirement)
4. Investment options - variety including fixed rate
5. Compliance - 409A, 101(j)
409A compliance: “non-qualified deferred compensation” must comply with various rules regarding the timing of deferrals and distributions.
101(j) compliance: (aka COLI Best Practices). Definitions of eligible executives and requirements to obtain consent to insure in order for the death benefit to be non-taxable. For the 2020 plan year, an employee who earns more than $125,000 in 2019 is an HCE. For the 2021 plan year, an employee who earns more than $130,000 in 2020 is an HCE.
Plan Security
Plan Security:
- Trust structure
- Trust document provisions including:
a. liquidity options
b. flexibility
c. fees and services
Plan Audits
Our audits are focused on five areas (see audit 2 pager)
- Plan design
- Plan funding
- Plan security
- Investment performance
- Plan Communication and Administration
As part of our process we will review current plan documents, census data, current funding structure and provide observations and recommendations for plan enhancements
Change in Control
There are 5 plan transition options given a change in control (see change in control matrix) Understanding each option and how each applies the buyer and/or the seller is our focus.
Strategic Fee Income Planning
Strategic Fee Income Planning:
Create additional income streams for the bank by exploring new loan growth opportunities and other fee income strategies.
IRC 280G
Design and structure compensation and benefit plans that maximize the deduction of parachute payments paid to an executive upon a change in control. (See 280G analysis and MC article)
IRC 162M
Design and structure benefit and compensation plans that maximize the $1 million-dollar limit on the amount of deductible compensation paid to the C-Level executives (See MC article on 162M and deferred compensation plans)
M&A
Consult on how a merger or acquisition impacts the company’s:
- executive benefits plans
- eligible group
- plan design differences
- change in control planning options
Asset Structure
Determine which asset structure is best. BOLI vs. Taxable Securities from a tax, accounting, P&L, cash flow costs and cost recovery perspective
Product Selection
Product analysis in all BOLI product types including 1. general account
- separate accounts
- hybrid structure
Evaluate short term and long cost structure and best in class institutional investment options. (See and understand details of our COLI product due diligence)
Tax Impact
Ensure efficient tax structure
P&L Impact
Earnings impact differences between investment options and BOLI structures
Cash Flow Cost
Evaluation of fees and tax impact
Economic Cost
Compare one course of action with that of another; company’s cost of money is always taken into consideration
Carrier and Manager Due Diligence
Insurance carrier strength, credit analysis and investment manager performance
Asset Allocation
Best in Class fund review with Morningstar Ratings ; Comparisons to provide the most efficient asset allocation given the bank’s balance between investment return and risk weighting.
Plan Enrollment
Set up enrollment with mapbenefits, create enrollment materials and set frequency of enrollments
Plan Communication
Choose multiple forms of communication (written, video and webinars) and align plan communication with plan documentation to best educate the plan participants
Plan Set Up
Create the plan in mapbenefits given the discussed and agreed upon plan design
Plan Accounting
Provide monthly and/or quarterly accounting for both the asset and liability. All plan accounting including journal entries can be access through the Plan Sponsor portal of mapbenefits.
Participant Access
Participants use mapbenefits to manage their personal account information, complete enrollment, and access real-time account activity.
- View Elections and Benefits
- Change Elections
- View Fund Information and Account Rate of Returns
- Manage Fund Allocations
- View Personal Rate of Return Charts
- Access Support Site and FAQ’s
- View Plan Information
- Complete Online Enrollment
- View Participant Statements
- View Historical Reports
- Access Real Time Reports
- Access to the Retirement and Risk Planning Tools
- Access to the mapbenefits mobile app
Corporate Access
The mapbenefits application is utilized by company HR and finance administrators to view dynamic corporate level reporting, statements, and employee account details.
• Access Accounting and Reconciliation Reports
• View Participant Elections and Benefits
• View Fund Information and Account Rate of Returns
• Utilize the Service Calendar
• Access Real Time Reports (100+)
• View Historical Reports
• View Participant Statements
• View Plan Information
• Access the Support Site and Frequently Asked Questions (FAQ’s)
• Utilize the Retirement and Risk Planning Tools
Financial Management
mapbenefits addresses the reporting requirements needed for corporate accounting, finance, and human resources (HR) departments. This includes the ability the access over 100 reports that can be generated for information about plan participants or for the plan in the aggregate for corporation’s perspective.
mapbenefits™ utilization
mapbenefits was designed specifically for executive benefit plan administration and asset/liability management utilizing Corporate Owned Life Insurance (COLI) and taxable mutual funds. mapbenefits can be used to administer the following plans:
- Deferred Compensation Plans (fixed and variable)
- Long Term Incentive Plans (LTIP)
- Supplemental Executive Retirement Plans (SERP)
- Executive Disability Income Plans
- Executive Long-Term Care Plans
- Split-Dollar Plans
