Help your executives build future wealth with a customized solution 


Did you know? 

89% offer a deferred compensation plan to provide a competitive benefits package to key employees1 

72% Contributing to a deferred compensation plan have employer and employee contributions1 

Overview 

With the job market as competitive as it is today, offering talented executives much more than just health benefits and a 401(k) is critical. To be successful at recruiting, rewarding, or retaining key people, additional non-qualified executive benefits should be included in the total package of offerings. 

Non-qualified deferred compensation (NQDC) plans can provide an effective way for employers to attract and retain top talent while providing attractive tax benefits as well. NQDC plans can be funded with employee deferrals, employer matches, and employer contributions, giving flexibility in the plan design to meet both the employee’s and the company’s goals. In addition to funding flexibility, the plans can also be discretionary, enabling the business to select who receives benefits, when they receive them, and how much they receive. 

In summary, your selected participants can defer salary on a pre-tax basis. 


Key highlights 

  • No limits on the amount of salary deferred 
  • You can make the plan more attractive by matching salary deferrals — 401(k) mirror 
  • You can set when and how retirement payments are made 
  • Often informally funded with life insurance  
  • Participant pays tax only when payments received 
  • You can deduct benefits once paid 


NQDC plans are powerful tools to help recruit, reward, and retain top talent by offering select employees/executives the opportunity to defer a portion of their income for future use. When funded with life insurance, these plans can provide tax-deferred growth, a potential death benefit, and supplemental retirement income — making them an attractive and flexible benefit for key people. 

 

 

 

 

This material is for informational purposes only. It should not be considered as investment, financial, legal or tax advice. You are encouraged to discuss this concept with your legal, tax and financial advisors. 

 

 

12023 Principal Trends in Nonqualified Deferred Compensation Report, Research Key Findings, 11/2023