Which statement best describes a supplemental executive retirement plan (SERP)?

Which statement best describes a supplemental executive retirement plan (SERP)?

• A. A SERP is a funded or unfunded plan providing benefits for select employees in excess of those provided by the qualified retirement plan.
• B. A SERP is a plan that replaces the qualified retirement plan for all employees.
• C. A SERP can only be funded.
• D. A SERP is a plan that provides benefits for select executives beyond those provided by the qualified retirement plan and may be funded or unfunded.

Answer: (A)

SERPs are nonqualified retirement arrangements that provide additional benefits to a select group of employees, typically executives, beyond what the qualified retirement plan offers. They can be funded or unfunded, and they don’t replace the qualified plan for all employees. The best statement matches this by noting that a SERP delivers extra benefits to select employees beyond the qualified plan and may be funded or unfunded.

SERPs are nonqualified retirement arrangements that provide additional benefits to a select group of employees, typically executives, beyond what the qualified retirement plan offers. They can be funded or unfunded, and they don’t replace the qualified plan for all employees. The best statement matches this by noting that a SERP delivers extra benefits to select employees beyond the qualified plan and may be funded or unfunded.