PLANADVISER - September/October 2022 - 30
beyond 401(k) / NQDC plans
NQDC Investment Menus
The type of lineup drives complexity in managing liabilities
W
ith the U.S. seeing its tightest labor market since
World War II, reports Goldman Sachs, competition
for attracting and retaining key employees is
fierce. Nonqualified deferred compensation plans have been
invaluable for both, experts say, as the plans can help highly
paid executives save for retirement on a tax-deferred basis
when their income exceeds the IRS limit for a 401(k).
The unfunded type of NQDC plan-and also the most
common, according to wealth management firm Henssler
Financial-is intended for top earners and allows the
employer to create a competitive compensation package.
Also called executive, or top hat, plans, they are technically
agreements saying the company will pay an NQDC plan
participant tax-deferred compensation at some point in the
future, typically at retirement-although it can be timed to
pay for college tuition funding or other large expense.
Unlike with a qualified plan-or a funded NQDC-
the company assumes a contractual obligation to pay the
benefit; no contributions must be " irrevocably and unconditionally
set aside with a third party " to ensure the agreement
is kept, as Henssler explains it. And, because no earnings
are set aside, the participant pays no tax until the
benefit is in hand.
The plans are also exempt from requirements pertaining
to participation, vesting, funding and fiduciary responsibilities
under the Employee Retirement Income Security Act,
Sections 201(2), 301(a)(3) and 401(a)(1).
" [NQDCs] can help participants accomplish all of their
financial goals, and [they're] a great tool for plan sponsors, "
says Kevin Mitchell, vice president, workplace consulting, at
Fidelity Investments in Deerfield, Illinois.
Funding an Unfunded Plan Via COLI
While employers are not required to accumulate assets to
ensure they will be able to meet their obligation, many in
fact do, says Henssler Financial, noting, " This is commonly
referred to as 'informally funding' an NQDC plan. "
One of the standard tools for such funding is corporate30
| planadviser.com September-October 2022
Art by Harry Campbell
http://www.planadviser.com
PLANADVISER - September/October 2022
Table of Contents for the Digital Edition of PLANADVISER - September/October 2022
The Possibilities Ahead
The Full Potential
2022 PLANADVISER National Conference
NQDC Investment Menus
Reg BI’s Impact on 403(b)s
PEPs’ Slow Growth
Scaling for the Future
Rollover Rules for 457(b) Plans
Jorge Bernal
PLANADVISER - September/October 2022 - Cover1
PLANADVISER - September/October 2022 - Cover2
PLANADVISER - September/October 2022 - 1
PLANADVISER - September/October 2022 - 2
PLANADVISER - September/October 2022 - 3
PLANADVISER - September/October 2022 - 4
PLANADVISER - September/October 2022 - 5
PLANADVISER - September/October 2022 - 6
PLANADVISER - September/October 2022 - 7
PLANADVISER - September/October 2022 - 8
PLANADVISER - September/October 2022 - 9
PLANADVISER - September/October 2022 - 10
PLANADVISER - September/October 2022 - 11
PLANADVISER - September/October 2022 - 12
PLANADVISER - September/October 2022 - 13
PLANADVISER - September/October 2022 - 14
PLANADVISER - September/October 2022 - 15
PLANADVISER - September/October 2022 - The Possibilities Ahead
PLANADVISER - September/October 2022 - 17
PLANADVISER - September/October 2022 - 18
PLANADVISER - September/October 2022 - 19
PLANADVISER - September/October 2022 - 20
PLANADVISER - September/October 2022 - 21
PLANADVISER - September/October 2022 - The Full Potential
PLANADVISER - September/October 2022 - 23
PLANADVISER - September/October 2022 - 24
PLANADVISER - September/October 2022 - 25
PLANADVISER - September/October 2022 - 2022 PLANADVISER National Conference
PLANADVISER - September/October 2022 - 27
PLANADVISER - September/October 2022 - 28
PLANADVISER - September/October 2022 - 29
PLANADVISER - September/October 2022 - NQDC Investment Menus
PLANADVISER - September/October 2022 - 31
PLANADVISER - September/October 2022 - Reg BI’s Impact on 403(b)s
PLANADVISER - September/October 2022 - 33
PLANADVISER - September/October 2022 - PEPs’ Slow Growth
PLANADVISER - September/October 2022 - 35
PLANADVISER - September/October 2022 - Scaling for the Future
PLANADVISER - September/October 2022 - 37
PLANADVISER - September/October 2022 - 38
PLANADVISER - September/October 2022 - Rollover Rules for 457(b) Plans
PLANADVISER - September/October 2022 - Jorge Bernal
PLANADVISER - September/October 2022 - Cover3
PLANADVISER - September/October 2022 - Cover4
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