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Participant Viewpoint: My Investment And Risk Management Strategies For Nonqualified Deferred Compensation

I work for a Fortune 500 company, and as a member of management I have the opportunity to take part in its nonqualified deferred compensation plan. Here is how I handle my NQDC investments and manage the risk of corporate bankruptcy.



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Key Points in This Article
I don't put "safe and secure" fixed income investments into my NQDC plan. I manage risk by investing in equities in the NQDC plan while holding safe fixed income investments in my IRA and 401(k).
Delaying the deferral of compensation until later in your career shortens the period of exposure to the risk of corporate bankruptcy, as does scheduling a relatively short payout period for distributions.
Set a reasonable limit on the percentage of your assets that you hold in your NQDC accounts.