Bridging the Executive Benefits Gap
For Employees Interested in Learning More about Financial Wellness and Tax Mitigation StrategiesBenefits beyond the limitations of group insurance for the highly compensated.
The education and strategic planning services offered by Financial Harvest Wealth Advisors can help employees genuinely understand their savings and benefits options and utilize strategic opportunities for securing and accumulating wealth.
This webpage shows examples of select benefit plans and insurance products that may vary by plan design and employer. (Many of the examples shown here represent strategies we’ve used to help clients with their Lockheed Martin employee benefits.) However, the charts and illustrations are also helpful for anyone interested in learning more about the ways today’s savvy and competitive employers are partnering with their employees, helping their valued team members achieve financial wellness.
Attracting and retaining mission-critical talent hinges on employers who, as plan sponsors, equip employees with education, tools, and opportunities to achieve their savings goals while building rock-solid retirement readiness. Learn how your organization can enhance its employee benefit offerings – Contact Financial Harvest Wealth Advisors.
Solutions Specifically for You, as a Highly Compensated Employee
How confident are you that you are fully utilizing and optimizing your retirement plan to make work optional and build wealth for your family? Are you appropriately navigating the general group insurance limitations in order to protect your income for your family? These are challenging, real questions that employees and executives must face. And the more your income increases, the harder these questions may be for you to answer without objective, third-party insights and guidance.
We invite you to explore the topics below and then talk with David Witter for 30 minutes. One no-obligation phone call could lead to a significantly more secure future for you and your family.
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Example of a Salaried Savings Plan Used for Clients with Lockheed Martin Employee Benefits
(plan specifics may vary)Will your retirement bring the freedom to expand your life and enjoy new experiences? Most retirement plans, even when supplemented by Social Security, fall short in comparison to pre-retirement earnings. And as you advance in your career, the gap between the amount you can save through traditional retirement plans and the amount you need to enjoy in retirement grows wider and wider.
One solution for bridging this gap is to utilize after-tax contributions to your Salaried Savings Plan to fund Roth IRAs. To help you save more effectively for retirement, you’ll want to:
- Maximize your and your employer’s contributions to reach overall plan limits. For 2025, these overall limits are $70,000 annually for employees ages 49 and under, and $77,500 annually for employees age 50 and over. For employees between the ages of 60 and 63, the catch-up contribution is increased to $11,250, for an overall plan limit of $81,250.
- Review the case studies shown here that present examples of how to fund Roth IRAs with after-tax dollars that grow tax free once rolled over.
- Recognize that Nonqualified Salaried Savings Plan (NQSSP) assets are not protected from creditors. Plan participants become general creditors to the organization in the event the organization files for bankruptcy. Also, depending upon the employee’s payout elections, NQSSP can result in a spike in income taxes at the time of separation.
- The examples below will inspire questions from you about how you, too, can take advantage of this strategy, ensuring that you get your full match and make the most of your 401(k) plan. Contact david@financialharvest.com
Schedule a 30-minute Benefits Optimizer Session with the Financial Harvest Wealth Advisors Team
The three case studies below present two possible scenarios for each of three workers. Case Studies #1 and #2 are applicable to workers age 49 and younger and are based on guidelines and limits set by the IRS for the 2025 tax year. In Case Study #1, the executive is age 38, while in Case Study #2 the executive is age 43. The third Case Study looks at an executive who is age 50 and positioned to take advantage of the IRS permitted catch-up options for workers age 50 and above.
In all three examples, Option A represents an executive who wants to limit the amount of spillover contributions to the NQSSP while approaching the overall plan limit. Option B gets very close to the overall plan limit into the 401k but requires more spillover into the NQSSP.
401(k) Modeling Case Study – 49 and under (#1)
| Age 38, overall limit – $70,000 | |
|---|---|
| Base | $350,000 |
| Bonus & LTI | $300,000 |
| Total compensation | $655,000 |
Company Match:
10% Total
401(k) – company match
- 50% of first 8% of contributions
401(k) – Other company contribution
- 6% of base pay
Option A
Option B
All examples used in this document are hypothetical and are for illustrative purposes only.
401(k) Modeling Case Study – 49 and under (#2)
| Age 43, overall limit – $70,000 | |
|---|---|
| Base | $300,000 |
| Bonus | $80,000 |
| Total compensation | $380,000 |
Company Match:
10% Total
401(k) – company match
- 50% of first 8% of contributions
401(k) – Other company contribution
- 6% of base pay
Option A
Option B
All examples used in this document are hypothetical and are for illustrative purposes only.
401(k) Modeling Case Study – 50+ (#3)
| Age 50, overall limit – $77,500 | |
|---|---|
| Base | $400,000 |
| Bonus | $500,000 |
| Total compensation | $900,000 |
Company Match:
10% Total
401(k) – company match
- 50% of first 8% of contributions
401(k) – Other company contribution
- 6% of base pay
Option A
Option B
Universal Group Life Insurance
Group life insurance provided through your employer is an extremely worthwhile benefit. Many companies offer employees excellent group life insurance options that establish a baseline of coverage. As a result, employees and executives may assume that their existing policy would adequately provide for the needs of their beneficiaries.
But ‘doing the math’ often reveals surprising gaps between your insurance policy payout and the amount of money your loved ones would need for the years ahead in the event of your passing.
You and your family logically consider your incentives and bonuses as part of your total compensation. Omitting them from the formula in determining your income replacement objectives skews the math. And the higher your earnings, the bigger your shortfall may be. Highly compensated employees (HCEs) frequently discover that they are among the most underinsured workers in the workplace.
Consider this example:
HCE Elizabeth earns $280,000 annually in base pay. Elizabeth’s bonus pay is $125,000 annually, plus she receives $195,000 in LTI vesting. While Elizabeth’s qualified pay (her salary) is $280,000, her annual total compensation is $600,000.
$280,000 Base pay
$125,000 Bonus
$195,000 LTI vesting
$600,000 Total Compensation annually
Elizabeth’s group universal life insurance policy selection is 4x her base pay or: $280,000 x 4 = $1.12 million
But in evaluating the number of years of future income Elizabeth needs to replace to ensure her family’s financial security, her coverage shortfall becomes very obvious.
Using the 10x rule, Elizabeth’s optimal coverage should be: $600,000 x 10 = $6 million
Elizabeth is underinsured by $4.88 million!
Solution: Purchasing a supplemental individual term life insurance policy (in addition to your employer-offered benefits) can take you from underinsured to confidently and comprehensively insured. And while group life insurance premiums typically increase each year, purchasing an individual level term policy keeps your cost stable … and your peace of mind high.
Level term life insurance guarantees that you pay the same price for your policy for the entire length of the term, often 20-30 years, plus your death benefit never changes. The Financial Harvest team can help you evaluate the number of years of income you need to replace, your true total compensation value, and your options to purchase a supplemental individual policy to alleviate the gaps, and the worries.
Schedule a 30-minute Benefits Optimizer Session with the Financial Harvest Wealth Advisors Team
Long-Term Disability Insurance
(LT disability)If the American workforce took any one lesson away from the pandemic, it was that sometimes in life, the most unanticipated events happen. No one expects to become permanently disabled, yet according to data from the Social Security Administration, prepared by the Center on Budget and Policy Priorities, a 20-year-old worker (in 2020) has a one in three chance of death or disability before reaching retirement at age 67.
Long-term disability insurance protects your income. In so doing, it can protect your future and that of your spouse and children. But most workers do not have sufficient LTD insurance to allow them or their family to go forward without significant disruption and changes to their current quality of life.
Example:
Samuel is a highly compensated employee at Lockheed Martin. He earns $280,000 in base pay, with bonus pay of $125,000 annually, and $195,000 in long-term incentive vesting, which brings his total rewards pay to $600,000 annually.
$280,000 Base pay
$125,000 Bonus
$195,000 LTI vesting
$600,000 Total Compensation annually
Samuel’s current long-term disability is 60% of his base pay. Sixty percent of $280,000 is $168,000 annually or $14,000 monthly, which for Samuel would represent a substantial reduction in his pre-disability earnings. Would this amount be sufficient to provide for the added costs of living with a disability? How would $14,000 stand up to inflation, and would Samuel still be positioned to provide for his children’s educational needs and any number of other plans he and his spouse had for their family?
Each employee must evaluate the financial value and the personal assurance that comes with purchasing a supplemental plan to cover the gap in income not currently covered by his or her employer’s LTD plan.
Schedule a 30-minute Benefits Optimizer Session with the Financial Harvest Wealth Advisors Team
Health Savings Accounts
(HSAs)Often, employees have access to Health Savings Accounts that offer the “triple crown” of tax savings. Health savings accounts (HSAs) are tax-deductible savings plans that enable employees to put aside pre-tax dollars for healthcare expenses that may arise in the future or even after retirement.
Here’s how this tax savings triple play can work for you:
- Contributions to your HSA are excluded from earned income, making them non-taxable. They remain untaxed as long as you use them for a qualified medical expense, such as your health insurance deductible, copayments, coinsurance and most medical expenses.
- Contributions to your HSA are excluded from Federal Insurance Contributions Act (FICA) taxes for Medicare and Social Security.
- Funds within your HSA can be invested for tax-free growth, just like a Roth IRA.
Good to Know
- For example, most participants in a Health Savings Account can contribute to their HSA for the previous tax year up through the tax deadline (typically April 15) of the following year.
- The money and the earnings in your HSA are yours, including any contributions made by the plan provider. If you leave the company, the full value of the account is still yours.
- Unlike a Flexible Spending Account, the money in your Health Savings Account rolls over without expiration or penalty, year after year.
Many employees can participate in a triple tax-advantaged HSA available in coordination with a high-deductible health insurance plan offered through their employer. However, regulatory guidelines established by the federal government state that employees cannot participate in any HSA if they are enrolled in Medicare, covered by medical benefits from the Veterans Administration, and a few other specific exclusionary conditions. Other requirements also exist, including age limits and contribution limits.
| HSA Annual Contribution Limits 2025 | |
|---|---|
| HSA Employee Contributions for Individual Coverage Plans | $4,300 |
| HSA Employee Contributions for Family Coverage Plans | $8,550 ($164.42 weekly) |
| Employees who are age 55 and older can contribute an additional $1,000 per year. | |
| Employees whose spouse is 55 or older may establish a separate HSA and make a catch-up contribution to that account. | |
| Employer HSA Account Contributions 2025 | |
|---|---|
| LMCO will contribute annually | Up to $1,500 |
| LMCO will contribute additionally per employee (conditions apply) | $500 |
| LMCO will contribute for employee’s spouse (conditions apply) | $500 |
More About Health Savings Accounts
Regulated by the Internal Revenue Service (IRS), additional information about Health Savings Accounts (HSAs) is available at IRS.gov. (Search: “HSA” for this year’s most up-to-date regulatory guidance.)
Benefits Optimizer Sessions
and Quick Benefit Wins- Schedule a 30-minute Benefits Optimizer Session with the Financial Harvest Wealth Advisors Team:Email30-min Video Meeting30-min Phone Meeting
- Assess gaps created for your family with your current life insurance and long-term disability plans.
- Remember to rollover after-tax contributions.
- Consider how your Non-Qualified Salaried Savings Plan (NQSSP) may be subject to creditors, as well as the plan’s future tax consequences.
