FutureCompSM Service Program

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Save administrative costs and increase plan flexibility with a deferred compensation plan that employs flexible investment vehicles such a mutual funds, equities or debt offerings. Merrill Lynch’s FutureComp Service is a non-qualified deferred compensation solution that permits highly compensated employees to defer up to 100% of their compensation to a future date.

  • Provides a way for key employees to defer current income taxes on an unlimited amount of their compensation
  • Increase compensation through employer matching contributions
  • Available to as few as one employee

FutureComp Service Program Features

Description

A non-qualified deferred compensation solution that permits highly compensated employees to defer up to 100% of their compensation to a future date, reducing their current tax obligations.

Flexibility

  • Can invest in mutual funds, individual equities, debt offerings
  • Can change deferral elections annually
  • Can elect specific distribution dates to meet future obligations
  • Can receive retirement distributions in one sum or installments
  • Can make matching employer contributions (with or without vesting)

Eligibility

  • Employer decides who will be allowed to participate
  • Can discriminate to highly compensated or key employees
  • As few as one employee may be eligible

Simplicity

Minimal paperwork required:
  • New Account Documentation
  • Plan Document and Adoption Agreement
  • Trust Agreement

Administrative requirements

  • Monthly statements of account asset activity provided to Plan Sponsor
  • Annual IRS Form 1041 reporting provided to Plan Sponsor
  • Plan Sponsor must engage a recordkeeper to track participant benefits

Frequently Asked Questions About the FutureComp Service Program

Who are the best candidates for the FutureComp Service Program?

Typically, C Corporations that are in no danger of becoming insolvent or bankrupt in the foreseeable future. However, S Corporations can also adopt the plan.

What is deferred compensation?

Deferred compensation is an agreement between an employer and their employees to pay compensation at some date in the future. Compensation may include salary, bonus and commissions.

What does “non-qualified status” mean?

Non-qualified generally means that the plan is not a tax-qualified plan under Section 401(a) of the Internal Revenue Code, which sets standards for qualified plans like profit-sharing, money purchase and 401(k). Non-qualified plans are not subject to the tax law requirements on contribution limitations and discrimination with respect to eligibility and vesting. The plan’s non-qualified status also alleviates the need to submit IRS Form 5500 reports to the IRS. The only federal filing required is a letter to the Department of Labor (within 120 days of plan adoption) that states that a non-qualified plan has been adopted.

What is a rabbi trust?

A rabbi trust is a vehicle that allows company assets to be placed in an irrevocable trust, titled in the company’s name. Since this trust is titled in the company’s name, the assets are subject to the general creditors of the company. The trust is essentially earmarked for the benefit of the participants, but not held for their exclusive benefit.

Related Products & Services

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For more information call 1.866.4ML-BUSINESS (465-2874) or e-mail us at AskMLBiz@ml.com.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is a registered broker-dealer, not a bank, and the WCMA account is not a bank account. Banking services are provided by licensed banks or by third parties through arrangements with licensed banks. Unless otherwise indicated, investment products are not FDIC-insured, not guaranteed by a bank and may lose value.

Working Capital Management Account and WCMA are registered service marks of Merrill Lynch & Co., Inc.

Neither Merrill Lynch nor its representatives provide legal or tax advice. You should consult with your own legal/tax advisor regarding your particular situation.

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