PLANADVISER - March/April 2021 - 4

data points //
The Many Uses of NQDC Funds
To pay for an early retirement or a child's education are just two examples
I
n our 2020 PLANADVISER Recordkeeping
Survey, 39 providers
reported serving a nonqualified
deferred compensation (NQDC) plan.
Seventeen-including 65% of responding
Section 409A plans-answered a
separate, detailed NQDC questionnaire
regarding plan type, plus liabilities and
number of participants.
With Section 409A plans, participants
earn compensation-i.e., from
salary,
incentive pay or stock-in one
year that will be paid at some point
in the future. Therefore, participants
make elections for deferrals and distributions
ahead of when the deferrals
will be made.
Further, with 409A plans, the plan
sponsor has a large degree of flexibility
in plan design. It can specify whether
participants' money is available to them
before retirement or at a separation of
service, says Steve Marrow, senior vice
president of plan sponsor strategy and
analytics at Fidelity Investments.
To recruit top talent, Marrow notes,
sponsors might want to let the plan
meet executives' financial needs beyond
retirement. " If the plan is designed so
that in-service distributions may be
elected for employer money, any vesting
schedule attached to that money would
have to be considered for distribution
timing, " he adds.
Mark West, national vice president
of business solutions at Principal
Financial Group, says 457(f) plans are
used by plan sponsors more as a retention
mechanism and do not offer the
various payment dates that Section
409A plans do.
The most common use of NQDC
plan accounts is to bridge the gap for
participants who want to retire early
and avoid dipping into their qualified
account or taking Social Security
before age 70, West says. As for other
uses of in-service distributions, paying
for a child's education is a use that
Principal sees the most, West says.
-Rebecca Moore
Number of Nonqualified Plans, by Plan Type
l Nongovernmental 457(b) plans
l 457(f) plans
l 409A plans
1,027
3,962
7,012
Liabilities, by Plan Type
l Nongovernmental 457(b) plans
l 457(f) plans
l 409A plans
$14.5b
$149.0b
$138.5b
Number of Participants, by Plan Type
l Nongovernmental 457(b) plans
l 457(f) plans
l 409A plans
11,361,089
5,078,401
635,929
Source: 2020 PLANADVISER Recordkeeping Survey
4 | planadviser.com March-April 2021

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PLANADVISER - March/April 2021

Table of Contents for the Digital Edition of PLANADVISER - March/April 2021

A Season for Change
Through the Ages
Overcoming Obstacles
A Plan Feature Run Wild
Not Just Retirement Services
Take It Past the Limit
Lifetime Income Illustrations
Wanna Be a PPP?
PLANADVISER - March/April 2021 - Cover1
PLANADVISER - March/April 2021 - Cover2
PLANADVISER - March/April 2021 - 1
PLANADVISER - March/April 2021 - 2
PLANADVISER - March/April 2021 - 3
PLANADVISER - March/April 2021 - 4
PLANADVISER - March/April 2021 - 5
PLANADVISER - March/April 2021 - 6
PLANADVISER - March/April 2021 - 7
PLANADVISER - March/April 2021 - 8
PLANADVISER - March/April 2021 - 9
PLANADVISER - March/April 2021 - 10
PLANADVISER - March/April 2021 - 11
PLANADVISER - March/April 2021 - 12
PLANADVISER - March/April 2021 - 13
PLANADVISER - March/April 2021 - 14
PLANADVISER - March/April 2021 - 15
PLANADVISER - March/April 2021 - A Season for Change
PLANADVISER - March/April 2021 - 17
PLANADVISER - March/April 2021 - 18
PLANADVISER - March/April 2021 - 19
PLANADVISER - March/April 2021 - Through the Ages
PLANADVISER - March/April 2021 - 21
PLANADVISER - March/April 2021 - 22
PLANADVISER - March/April 2021 - 23
PLANADVISER - March/April 2021 - 24
PLANADVISER - March/April 2021 - 25
PLANADVISER - March/April 2021 - Overcoming Obstacles
PLANADVISER - March/April 2021 - 27
PLANADVISER - March/April 2021 - 28
PLANADVISER - March/April 2021 - 29
PLANADVISER - March/April 2021 - A Plan Feature Run Wild
PLANADVISER - March/April 2021 - 31
PLANADVISER - March/April 2021 - 32
PLANADVISER - March/April 2021 - 33
PLANADVISER - March/April 2021 - Not Just Retirement Services
PLANADVISER - March/April 2021 - 35
PLANADVISER - March/April 2021 - Take It Past the Limit
PLANADVISER - March/April 2021 - 37
PLANADVISER - March/April 2021 - Lifetime Income Illustrations
PLANADVISER - March/April 2021 - Wanna Be a PPP?
PLANADVISER - March/April 2021 - 40
PLANADVISER - March/April 2021 - Cover3
PLANADVISER - March/April 2021 - Cover4
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