FAQs
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Clear, practical information about the strategies that shape your organization’s leadership.
Executive Benefits: SERPs
What is a Supplemental Executive Retirement Plan (SERP)?
A SERP is a non-qualified supplemental retirement plan designed to enhance the plan participant’s retirement benefit. Unlike qualified plans such as 401(k)s, profit-sharing plans, or pension plans, which have strict contribution limits, a SERP (including split dollar and 457(f) variants) is flexible and has no imposed limits on the amount that may be provided to the plan participant, other than the standard rule that executive compensation must be reasonable.
Why is a SERP ideal for credit unions and non-profits?
SERPs are excellent vehicles for rewarding and retaining your key employees with competitive compensation. The plan is NCUA-compliant and poses no limits on the amount the plan participant can receive in a tax-advantaged manner, other than the standard rule that executive compensation must be reasonable.
Do SERP plans come in different types?
At PARC, we primarily implement two types of SERPs: 457(f) and split dollar plan designs.
There are other plan structures under the SERP umbrella, such as:
- restricted bonus plan
- leveraged 162 bonus plan (some call this an insured 457(f) plan)
However, these are simply variations of 457(f) plan designs. Many of the alternatives come with limiting factors that often lead credit unions to move away from them. And, more often than not, these plans are selected because their complexity was never fully explained.
Here’s how our two primary plan types work:
- 457(f) plan: As a non-qualified plan, this can be awarded to hand-selected employees, and unlike qualified plans, including 403(b), 457(b), and 401(k), there are no contribution limits set by the IRS. However, the NCUA sets a reasonableness standard that should be considered.
- Split dollar plan: Structured as a secured loan from the employer to the executive to purchase a life insurance policy, with the employer holding a first lien (collateral assignment) on the policy. When properly designed, it provides non-taxable distributions during key intervals, including retirement, while allowing the organization to recover all funds invested, plus interest.
Both 457(f) and split dollar plans can be fully customized to your organization’s goals and structure. We don’t believe in one-size-fits-all solutions, but we do believe there’s a SERP that’s the right fit for you.
To explore these plans in more depth, join one of our complimentary SERP 101 webinars.
What is the excise tax?
As part of the 2017 Tax Cuts and Jobs Act, the excise tax was designed to level the playing field between for-profits and non-profits when it comes to non-qualified deferred compensation plans. The law requires tax-exempt organizations to pay a 21% (current corporate tax rate) excise tax on compensation exceeding $1 million for covered employees.
Under the One Big Beautiful Bill (OBBB) signed in 2025, the definition of “covered employee” has been expanded to include any current or former employee, not just the top five highest-paid. The OBBB also applies the excise tax to certain “excess parachute payments,” even if total compensation is below $1 million.
According to current IRS guidance, Federal Credit Unions are not subject to the excise tax at this time.
Are split dollar plans subject to the excise tax?
No, split dollar SERPs are not subject to the excise tax because they do not generate any remuneration for tax purposes
Can a 457(f) be converted into a split dollar plan?
Yes, with board and plan participant approval. In the year the 457(f) is replaced, the organization recovers the entire accumulated deferred compensation liability from the 457(f) as non-operating income.
How much do split dollar plans like this cost?
When designed strategically, the only out-of-pocket expense to the organization is for the required legal documents, which are typically $4,000 per agreement, upon implementation, and less still for multiple agreements. Starting in the first year, many providers charge an annual servicing fee, however, we do not charge an annual service fee for the first 10 years. After the first 10 years, we charge $1,000 annually for administrative costs for annual reviews.
If the employee is uninsurable, can you still do a split dollar SERP?
If, for whatever reason, the employee cannot be insured, often the spouse can be insured as a joint-insured or substitute-insured.
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Our CEO is very close to retirement. Is it too late to put a split dollar plan in place?
It’s not too late. It can be more challenging because the loan size might have to be increased to achieve meaningful benefits. We will help you determine the best solution, based on the circumstances.
What is the first step if we want to learn more?
The ideal first step is always education. We host weekly webinars that cover SERPs in detail, and we can schedule a consultation with one of our experts. The benefits of SERPs are profound, but the plans are complex. We pride ourselves on our ability to simplify the complex. We want to make sure you understand the basics while we provide a no-obligation analysis of your key employees or current plans.
Compensation Consulting
What is total compensation value analysis?
A total compensation analysis evaluates every component of executive pay, cash and non-cash, to ensure your strategy is both competitive and sustainable. This includes salary, incentives, perquisites (perks), benefits, and retirement plans, all converted into annual cash equivalents using a standard methodology. The result is a clear, data-driven view of how your total compensation package compares to the market.
How do you determine if our compensation structure is competitive?
We begin by identifying a peer group that reflects your organization’s scale, complexity, and location. From there, we conduct a comprehensive market analysis to measure your compensation structure against industry benchmarks and trends, providing clarity, context, and confidence in every decision.
Do you offer ongoing support after implementing a compensation strategy?
Yes, we provide ongoing support to help ensure the strategy is effectively integrated into your organization, with adjustments made as needed to stay aligned with your evolving goals.
What’s the impact of an outdated compensation plan on our organization’s growth?
An outdated compensation plan can weaken engagement, hinder recruitment, and make it harder to retain key talent. Over time, that misalignment affects productivity, culture, and strategic performance. A modern, market-aligned compensation plan keeps your organization competitive and your leadership team focused on long-term success.
Why is a tailored compensation strategy so important?
Every organization operates differently: its goals, culture, and challenges are unique. A tailored compensation strategy ensures your approach reflects those realities. We design data-driven solutions that align with your mission today and position your organization for the future you’re building.
Executive Recruiting
What is executive search, and why would my organization need it?
Executive search is a consultative recruiting process designed to identify and attract impactful leaders who can shape your organization’s future. At PARC Street Group, we don’t just fill positions; we build leadership teams. Our retained searches focus on alignment, ensuring every candidate fits your strategy, culture, and long-term goals.
What levels of leadership do you recruit?
We specialize exclusively in executive-level placements, including C-suite roles, senior management, and board of directors. Our focus is on leadership positions that drive strategy, influence culture, and impact long-term performance.
What types of organizations and functions do you support?
We partner with banks and credit unions nationwide, conducting searches across all executive-level functions, including finance, operations, lending, human resources, technology, marketing, governance, and more. Whether you’re strengthening your board or hiring your next CEO, we tailor every search to your unique needs.
What is the typical timeline for completing a search?
Our retained search engagements typically take 45 to 90 days from start to offer, depending on role complexity and scheduling. The process includes five key stages:
- Client Kick-Off: Define goals and position requirements.
- Recruit & Qualify: Execute a targeted recruiting strategy with consistent progress updates.
- Candidate Submission: Present three qualified candidates within the first month.
- Client Interviews: Facilitate several rounds of interviews with selected candidates.
- Offer: Support in selection, negotiation, and presentation of the offer.
How does your fee structure work?
We take a different approach to retained search fees by using a flat-fee model. You are billed in three installments based on milestones:
First invoice: After the client discovery meeting.
Second invoice: After three candidates have completed client interviews.
Final invoice: Upon successful completion of the search and candidate acceptance of the offer.
We also offer a one-year unconditional guarantee. If the selected candidate separates within one year of hire, we conduct a replacement search at no additional cost.
Still have questions? We’re here to help.
Whether you’re exploring SERPs, compensation strategies, or executive recruiting, our team is ready to provide clarity and guidance you can trust.