What is a primary objective of establishing executive plans?

Establishing executive plans primarily aims to restore base plan benefits lost by tax law limits. Executives often reach the maximum contribution limits set by tax regulations for tax-deferred retirement savings. These limits can restrict the amount of income that can be saved in traditional qualified retirement plans like 401(k)s or pensions, thereby potentially limiting the retirement benefits available to high-level employees.

Executive plans, such as non-qualified deferred compensation plans, provide a mechanism to supplement these benefits, allowing executives to defer additional compensation and ultimately receive benefits that align more closely with their income and expected retirement needs. This design aligns with the organization’s objectives of encouraging and retaining top talent by providing them with competitive retirement benefits that can match their higher salary levels.

The other options do not reflect the primary objectives of executive plans. Instead, executive plans focus on enhancing benefits rather than providing lower benefits or minimizing company expenses, while the goal is not necessarily to reduce the number of participants but rather to provide valuable retirement planning resources for key executives.