Nonqualified Deferred Compensation (NQDC)

One of the most efficient ways to help your executives overcome the Retirement Income Gap created by qualified plan limits is by using a well-designed Nonqualified Deferred Compensation plan. It offers you and your highly compensated employees the flexibility to reach unique business and personal financial goals.

Benefits to Employer

  • Design the plan to meet the needs of your key executives to help recruit, retain and reward those key human assets.
  • Pick and choose who to make eligible for the plan among highly compensated employees.
  • Plan design and benefits can be tiered among different groups of participants giving you the flexibility to build the plan for your specific business requirements.
  • Matching contributions can offset missed qualified plan contributions due to testing issues.
  • Vesting schedules on company matches can create additional incentives for key executives to remain with the company and stay motivated.

 

Benefits for Key Executives

  • Each executive elects to defer compensation pre-tax. (FICA and FUTA taxes still apply.)
  • Tax-deferred accumulation on earnings.
  • No annual limitation on contributions. Up to 100% of compensation can be deferred. (Subject to company limits.)
  • No early withdrawal penalties via in-service accounts. (Subject to 409A regulations.)

 

 

Please watch this video to see how NQDC works from a participant's perspective:

 

Please watch this video for a breakdown of NQDC from the company's perspective.