Although nonqualified deferred compensation (NQDC) plan prevalence has decreased since 2007 (95%), it remains high, as 85% of responding companies report having NQDC plans, according to a press release. Two-thirds (67%) of responding companies report having supplemental executive retirement plans (SERPs) – similar to the prevalence in 2007.
More than seven in ten respondents (71%) report
informally funding their NQDC plans, up from 62% in 2007 and at the highest
level since 2001. Nearly four in ten (39%) report informally funding their
SERPs, vs. 48% in 2007.
Sixty-one percent of respondents funding their NQDC plans
and 68% of those funding their SERPs use corporate-owned life insurance or
trust-owned life insurance (COLI/TOLI). These funding vehicles remain the most
commonly used funding vehicle for both types of plans, the press release said.
The percentage of respondents exclusively administering
their NQDC plans in-house has dropped from 19% in 2005, to 15% in 2007 and 3%
in 2009. This has been accompanied by corresponding increases in the prevalence
of third-party administered and combination (in-house and third-party)
The decrease in in-house administration since 2005 may
reflect a need for more sophisticated administration in light of the
requirements of Internal Revenue Code section 409A, Clark Consulting said.
Nearly a third (32%) of respondents sponsoring SERPs
administer their plans in-house, slightly higher than in 2007 (30%) but lower
than the levels seen in 2005 (44%).