Companies view nonqualified deferred compensation (NQDC) plans as an important offering to help recruit, retain and reward executives. Many use them to enhance retirement outcomes for executives by allowing them to defer compensation above the statutory limits set by qualified plans. There are a variety of designs for NQDC plans, and it is up to plan sponsors whether to fund the plans or not.
Though not governed by the Employee Retirement Income Security Act (ERISA), NQDC plans have other regulations to which they must adhere, requiring a special expertise to administer and recordkeep these plans. Some are governed by Internal Revenue Code Section 409A, while others are governed by Section 457. In addition to specific expertise, NQDC plan sponsors are now looking to providers that can offer services beyond just the retirement plan, especially plan and financial education.The 2021 PLANSPONSOR NQDC Market Survey offers a list of providers, ranked by different criteria, including the number of Section 409A and Section 457 plans they serve, as well as by number of experts on staff.