2021
Recordkeeping Survey

Industry Snapshot

Industry Snapshot

NQDC Plans

Nonqualified deferred compensation (NQDC) plans offer a tax-deferred option to supplement an existing qualified employer-sponsored plan, such as a 401(k) plan. With the NQDC comes the ability to take advantage of pre-tax deferrals, tax-deferred growth and compounded earnings.

The sponsor has two types of recordkeeper arrangements to choose from: The plan will either be bundled with the sponsor’s 401(k) provider or managed by a specialist, says Brian O’Keefe of PLANSPONSOR. “Overall, recordkeeping NQDC plans can be difficult because of the various investment strategies; eligibility and deferral tracking; different rules and regulations; and the fact that most of these plans target executives.” In addition, O’Keefe says, the number of trusted providers is limited.

The bundled-vs.-unbundled decision will determine how the request for proposals (RFP) process is done, he says. Unbundled providers typically are evaluated like other providers are but asked questions specific to the NQDC market.

“In my experience,” says Stephen Mann, area senior vice president with Gallagher Benefit Services, in Barrington Hills, Illinois, “there are several important questions to ask nonqualified recordkeepers.”

These, he says, include: Does the recordkeeper have a dedicated 409A administrative system? Can its system manage a class-year plan and/or a distribution-based plan? Can a client fund its plan with mutual funds, corporate-owned life insurance (COLI) and/or a combination of the two? Will it automatically rebalance the company’s liability allocation with the company’s asset allocation? Does the recordkeeping system allow a company to partially fund its plan or to use an asset investment lineup different from the liability investment lineup? How many consultants are dedicated to the nonqualified platform? And does the recordkeeper provide accounting, compliance and funding services? —PS

Total assets

Total plans

Total participants

11,167

780,004

$175B

Total assets

Total plans

Total participants

11,167

780,004

$175B

Total assets

Total plans

Total participants

11,167

780,004

$175B

Total assets

Total plans

Total participants

11,167

780,004

$175B

Total NQDC Plan Assets

2013
$73B
2015
$80B
2017
$99B
2019
$113B
2021
$175B

Total NQDC Plans

2013
8,710
2015
9,174
2017
7,774
2019
8,306
2021
11,167

Total NQDC Plan Participants

2013
714,242
2015
770,185
2017
682,366
2019
780,173
2021
780,004