Non-Qualified Deferred Compensation (NQDC) Plans 

   
An Employer Retirement, Savings, or Deferred Compensation Plan  
* Does Not Meet The Tax & ERISA Requirements of Qualified Plans (401k’s for example)
* Assets Not Protected Nor Required to be Set Aside
* No Employer Annual Contributions to a Trust Required
* Designed to benefit individuals who do not satisfy requirements for participating in qualified plan
* Employer makes promise to pay an employee a certain benefit sometime in the future

Two Types of (NQDC):
  Excess Benefit Plan (EBP) (Combines with a Qualified Plan)
  Supplemental Employee Retirement Plans (SERP)
                      (Qualified Plan Not Needed)  

Benefits of (NQDC)
 * Avoid the Limitations present on “Highly Compensated Employees” of qualified plans
 * Employer Avoids many compliance tests
 * Lack of Annual Contribution requirements by Employer allows Cash to be Used for Other Business Objectives  
 * Provide a Powerful tool for recruiting and retaining executive talent -via more generous benefits
 * Allows Employer to Consider Employee’s entire salary when determining contributions and benefits under a plan.

Challenges of (NQDC)
 * Tax Deduction for Employer only received when employee receives income from the (NQDC)
 * Benefit Payments begin… employee must pay income tax withholding…failure on this employer loses tax deduction
 * Vesting schedule met by Employee entire NQDC payment added to other wages for payroll tax purposes
 * Employer’s inability or unwillingness to pay may present a risk for employee  

For An Assessment on Implementing a (NQDC)  Plan 
Contact US