A SERP is an agreement between an employer and one or more of its executives to provide corporate-sponsored supplemental retirement benefits. The plan can be structured as a defined benefit plan or a defined contribution plan.
Defined Benefit Structure – The company promises to pay an executive a specified amount of retirement income for a specified period of time.
Defined Contribution Structure – The company promises to contribute a specified amount for a specified period of time into a retirement account for an executive. At retirement, the accumulated contributions plus any earnings are paid out as retirement income over a specified period of time.