Nonqualified Deferred Compensation Plans
An Exclusive Benefit for Key Employees
A nonqualified deferred compensation plan (NQDC) is a company-sponsored benefit, offered in addition to a traditional retirement plan, that allows selected employees to defer a portion of their income to better align with their long-term financial goals.
Unlike a 401(k) or other qualified plans, NQDC plans are not subject to the Employee Retirement Income Security Act (ERISA) rules. Why is that important? This exemption provides employers with significantly more flexibility. The employer is not required to offer the plan to all employees, and it can be reserved for key personnel or top earners as a VIP benefit.
Additionally, there are no contribution limits. While qualified plans cap contributions each year, a nonqualified plan allows high earners to defer any amount—could be $1 or $1,000,000—making it a powerful tool for building long-term, tax-deferred savings beyond traditional limits.
Key Advantages
Retain & Reward
A constant strain on Human Resource departments is hiring and retaining good employees. Nonqualified plans can incentivize employees to join or stay with your company!
Customization
Employers might want to reward key employees with one type of nonqualified plan and executives with another, and that’s perfectly fine! Unlike qualified plans, nonqualified plans can be customized for specific groups or individuals, making them a flexible addition to your benefits package.
Additional Contributions
High-income earners often hit contribution limits on qualified plans. NQDC plans allow additional income deferral to help maintain retirement goals and lifestyle expectations.
Consulting Expertise You Can Count On
In addition to being a Financial Advisor at WWK Investments, Ryan Welch is also a Nonqualified Plan Consultant (NQPC). He brings extensive experience in guiding organizations—large and small—through the complexities of deferred compensation strategies.
He specializes in designing, implementing, and administering nonqualified plans, helping clients align their benefit offerings with strategic goals, compliance requirements, and competitive market standards.
