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Four Nonqualified Plan Trends To Watch With Tax Rate Increases

Tax changes have spurred an unprecedented level of curiosity about nonqualified deferred compensation plans. The timing for these plans could not be better for high earners and their employers. This article presents some key deferred compensation trends to watch.

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Key Points in This Article
Amid recent tax increases, executives and employers are taking a fresh look at opportunities to defer compensation. A nonqualified deferred compensation (NQDC) plan allows you to strategically defer income to keep your taxable income below various thresholds, potentially saving thousands of dollars in taxes. NQDC plans also allow for tax-deferred accumulation.
The timing for NQDC plans could not be better. Overall, corporate earnings have been steadily rising, reducing the corporate-bankruptcy risk faced by NQDC participants, and companies are looking for ways to reinvest money into the organization.
Other trends to follow include the growing appeal of electing 10-year distributions rather than lump sums, an increase in director deferral plans, and an uptick in the use of restricted stock unit (RSU) grants with deferral features.