2020
Recordkeeping Survey

Industry Snapshot

NQDC Plans

Executive retirement plans generically referred to as nonqualified deferred compensation (NQDC)—i.e., because they give employers none of the tax benefits associated with qualified plans—are often small in size. Forty-three percent have fewer than five participants, respectively, but they can be an important benefit for highly compensated employees (HCEs). The Government Accountability Office (GAO) estimates that as much as 80% of the large public companies in the Standard & Poor (S&P)’s 500 offer such plans to top executives.

NQDC plan recordkeeping and third-party administrator (TPA) services are largely split into two camps: 1) specialists, who offer deep NQDC-specific expertise on plan design and administration, and 2) generalists, who offer administration of the plans as a convenient add-on to other products or services. Yet, the landscape of NQDC plan administrators capable of delivering on these value propositions continues to change as acquisitions and partnerships reshape the industry.

Whichever service strategy, successful NQDC plan administrators must possess the knowledge and systems necessary to manage the complexity of these plans, especially when markets become turbulent, as has been the case with the coronavirus pandemic. Providers that combine the best people, processes and technology can help both NQDC plan sponsors and participants avoid potential regulatory issues. —BOK

Growth in Total NQDC Plan Assets ($MM)

2016
$101,613
2017
$104,454
2018
$151,666
2019
$118,216
2020
$152,072

Total 409A† Assets, Plans and Participants

Plan Size Assets ($mm)* Plans* Participants*
<$1mm

$740

2,179

22,535

$1mm – $10mm

$8,303

2,122

60,627

>$10mm – $50mm

$20,279

882

108,909

>$50mm

$72,536

347

326,375

*Not all providers report complete data; therefore, data segmented by plan size will not equal the ­corresponding overall total.
†Pertaining to plans covered under Section 409A of the United States Internal Revenue Code.