What is a non-qualified deferred compensation plan?

It is an employer-sponsored plan that is offered only to key employees.  Key employees can contribute their own money into the plan and the company, if it chooses to do so, can contribute money as well.

It’s a great tool to help Recruit, Reward and Retain key talent


Benefits to Key Employees can Include:

  • Defer pre-tax savings well above and beyond the 401k limitations

  • Receive additional tax-deferred growth and compounded earnings

  • Help control the timing of taxation on salary and bonuses

  • Help save additional dollars to replace their higher than average salaries and desired retirement lifestyles

  • Restore 401k contributions if they receive refunds due to annual IRS testing

  • Systematically save for pre 59 ½ goals like college on a payroll deducted and tax deferred basis

  • Receive dollars on either a lump sum basis or spread payments out over many years

Benefits to Employers can Include:

  • Developing a competitive advantage by offering a savings and tax-deferral tool that many other employers don’t offer

  • Having the ability to design customized bonus and incentive programs that encourage and reward desired outcomes

  • Implementing vesting schedules on bonus and incentive programs that help tie key employees to the company for years to come

  • Retain Key Employees as they continually accumulate dollars that are not immediately vested and require their tenure over several years to receive the full value of the company's contributions

  • Create an ownership type experience without giving up actual shares of the company.  This is called Phantom Ownership

The company gets to choose:

  • Who participates

  • What can be contributed

  • The investment options for how the money is invested

  • When the benefits are paid out

Want to learn more?

Let’s set up a time to talk about how a Deferred Compensation plan can help your company reach its goals.

Non-Qualified Deferred Compensation