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Nonqualified Deferred Compensation: The Basics

by Bruce J. McNeil

Nonqualified deferred compensation (NQDC) provides a valuable financial-planning opportunity to defer taxable income until you need it. Here’s how.

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Your Company’s NQDC Plan: What You Must Understand To Maximize Its Value

Ten Key Features Of Nonqualified Deferred Compensation

UPDATES! The Terms Of Your Company’s NQDC Plan: What You Can Expect (Part 1)

UPDATES! The Terms Of Your Company’s NQDC Plan: What You Can Expect (Part 2)

Plan Design Features To Increase Participation In Nonqualified Deferred Compensation Plans

For Love Or Money: Look At Nonqualified Deferred Compensation With Eyes Wide Open

Risks Of Nonqualified Deferred Compensation: Examples From Court Cases

Keys To Successful NQDC Plans At Small Companies: A View From The Trenches

FAQs

What is nonqualified deferred compensation? What are its benefits to me?

Nonqualified deferred compensation (NQDC) is all about saving for your life goals in a way that reduces the…

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UPDATES! What percentage of eligible executives and key employees usually elect to participate in NQDC plans?

The answer depends on the features of the nonqualified deferred compensation plan and the company’s industry, along with the number of eligible executives and employees. Studies have shown that…

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More FAQs:

When my company sets up its NQDC plan, what structures and features does it need to decide on?

Is there vesting with NQDC plans? Is it possible to forfeit what I have deferred?

UPDATED! Does ERISA apply to and protect my nonqualified deferred compensation plan? What factors distinguish a top-hat plan from an ERISA plan?

Is my nonqualified deferred compensation plan registered under the securities laws with the SEC?

Will my nonqualified deferred compensation be reported in my company’s proxy statement?

Do I pay the administrative fees on my plan to enroll? Do I pay back my company for the taxes?

Why should I learn more about nonqualified deferred compensation?

Are there any books that you recommend for more technical guidance on nonqualified deferred compensation?

How does NQDC differ from regular deferred compensation arrangements, such as 401(k) plans?

Will I owe any income taxes when I elect to participate, when my income is deferred, or when I receive distributions?

UPDATES! Can I put more away with a nonqualified deferred compensation plan than with a 401(k) plan? What are the limits?

UPDATES! What can I not do with my NQDC account?

UPDATES! How do companies set up NQDC plans?

What are the risks in NQDC plans?

In a corporate bankruptcy, what will happen to my NQDC plan and my distributions?

Can the NQDC plan give me special preferences over other creditors in bankruptcy?

Are NQDC plans affected by the Supreme Court’s rulings on marriage equality?

NEW! Are stock options, restricted stock, and ESPPs subject to ERISA requirements and regulations?

What types of compensation can be deferred through NQDC plans?

How much of my compensation can I defer?

Does my participation in the NQDC plan (or the amount I defer) affect other benefit plans, such as my 401(k)?

UPDATES! Is there any company match or contribution with a nonqualified deferred compensation plan?