A rejiggering of top state and local rates as a part of President Trump’s tax reform could make non-qualified deferred compensation plan much more attractive, especially as a retention incentive for key employees.
A new study from the Plan Sponsor Council of America found that the most common reason employers offer an NQDC plan is to “have a competitive benefits package” (36.3 percent) followed by “helping eligible employees accumulate assets (23.4 percent). The research suggests many employers consider NQDC plans to be a key component in attracting and retaining top talent.
“For employers that have either adopted or are considering adopting nonqualified deferred compensation plans, this survey offers useful insights,” Bruce McNeil, a partner at The Wagner Law Group in Boston and a member of PSCA’s Board of Directors, said in a statement. “The survey can help plan sponsors more effectively develop these employee benefits with broader information from other companies on eligibility, vesting, distributions, and other plan features.”
Ken Raskin, PSCA’s Chairperson of the Board of Directors, added that the information from this survey will “be invaluable as we continue to expand our lobbying and research efforts and monitor how the Tax Cuts and Jobs Act of 2017 may further impact NQDC plans, as well as qualified plans.”
Other key survey findings include:
- Two-thirds of employers allow 10 percent or fewer of their total employees to participate in the NQDC plan.
- Half of employers allow both employee and employer contributions to the NQDC plan.
- Immediate full vesting increased 10 percentage points from 35.7 percent in 2016 to 45.9 percent.
- Nearly 60 percent of plans set money aside to fund benefits.
- A little more than half of plans use the same investment lineup in the NQDC plan as in the qualified plan.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
