Non-qualified deferred compensation, explained
How NQDC plans work, whether and how much to defer, how to choose a payout, and the tax and risk trade-offs. Each guide links to the free calculator so you can test the ideas on your own numbers.
What Is an NQDC Plan? How Non-Qualified Deferred Compensation Works
An NQDC plan lets select employees defer salary or bonus, and the income tax on it, until a later payout. Learn how it works, how it is taxed and the risks.
Read the guide →Is Deferred Compensation Worth It? A Decision Framework for NQDC Plans
Is deferred compensation worth it? It depends on your tax rate now vs. at payout, your payout schedule, any state move and employer risk. An NQDC framework.
Read the guide →How Much Should You Defer Into Deferred Compensation? A Step-by-Step Approach
How much should you defer into deferred compensation? Fund your 401(k) first, protect cash flow, target your top tax bracket and limit your employer risk.
Read the guide →NQDC vs 401(k): Key Differences and Which to Fund First
NQDC vs 401(k): compare contribution limits, creditor protection, rollovers, penalties, RMDs and state tax, and see the order many high earners fund them in.
Read the guide →How Is Deferred Compensation Taxed? Income Tax, FICA, W-2 Box 11 and Social Security
How is deferred compensation taxed? Income tax is due at payout as ordinary wages, while FICA is usually due when you earn or vest. Here's how each tax works.
Read the guide →NQDC Distribution Options: Lump Sum vs Installments, and How to Choose
NQDC distribution options usually include a lump sum or 5, 10 or 15 annual installments. Compare the tax, state, credit-risk and timing trade-offs of each.
Read the guide →Deferred Comp vs Brokerage Account: The Break-Even Math Behind Deferring
Deferred comp vs brokerage account: deferring wins mainly when your tax rate at payout is lower and taxable-account drag is high. Here's the break-even math.
Read the guide →Deferred Compensation State Tax: What Happens When You Move (the 10-Year Rule)
Deferred compensation state tax depends on where you earned it, where you live at payout and your payout schedule. Learn the 10-year rule in 4 U.S.C. §114.
Read the guide →What Happens to Deferred Compensation When You Leave a Company?
What happens to deferred compensation when you leave a company? Separation usually triggers payout under your election, unvested credits may be forfeited.
Read the guide →409A Deferred Compensation Rules: Election Deadlines, Changes and the 5-Year Rule
409A deferred compensation rules in plain English: the NQDC election deadline, 30-day and 6-month exceptions, changing payouts and the 20% tax penalty.
Read the guide →NQDC Plan Risks: Employer Bankruptcy, Rabbi Trusts and How to Limit Exposure
The biggest NQDC plan risk is employer bankruptcy: you are an unsecured creditor and a rabbi trust won't shield you. See other risks and how to limit them.
Read the guide →Deferred Compensation vs Roth: How High Earners Can Use Both
Deferred compensation vs Roth: NQDC is pre-tax with ordinary tax at payout, while a Roth taxes you now and grows tax-free. How to weigh, and combine, the two.
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