Helping Executives Unlock NQDC Value

As employers look to enhance financial planning for executives, they seek education and decision support from providers.

Nonqualified deferred compensation plans are becoming increasingly visible in retirement and executive benefits, according to Keith Gredys, the chairman and CEO of Kidder Advisers Inc. That visibility, he says, is fueled by employers and executives looking for additional ways to enhance retirement planning, while addressing future tax concerns and broader wealth accumulation goals.

Gredys says NQDC plans have historically operated in a niche corner of the retirement industry, but that is changing as advisers expand their service offerings and as industry consolidation brings retirement and wealth management practices together.

“It doesn’t necessarily fit every situation, but the topic is being brought up more and more,” Gredys says.

Nonqualified plans have been traditionally associated with large corporations and senior executives. While those organizations remain the primary market, Gredys says interest is gradually spreading to smaller employers.

“It used to be just the bigger companies,” he says. “It’s coming down to some midsize and smaller companies that say, ‘Hey, this might make sense.’”

At the same time, NQDC plans are increasingly being considered alongside other executive benefit strategies, including certain life insurance-based arrangements designed to create tax-advantaged income streams in retirement, Gredys adds: “Nonqualified deferred compensation plans and other executive benefits are starting to become more visible.”

2026 PLANSPONSOR Recordkeeping Survey respondents who took the follow up NQDC Market Survey reported they provide recordkeeping for 13,458 NQDC plans, excluding 457 plans, covering 866,515 participants. In addition to NQDC plans, 92.9% serve Supplemental Executive Retirement Plans, or SERPs, 92.9% serve long-term incentive programs, 78.6% serve defined benefit restoration programs, and 64.3% serve restricted stock unit plans.

An Education Gap

While nonqualified deferred compensation plans continue to be an important benefit for highly compensated employees, participation and engagement challenges persist, according to Monte Harrick, OneDigital’s senior vice president of executive benefits consulting.

He says many organizations have established NQDC plans but have not devoted enough attention to helping participants understand how to use them effectively.

“What we’re finding is there’s a lack of understanding, communication and the need for education,” Harrick says. “Plans are set up, but there’s either low participation or participants might be confused about their distribution options.”

Harrick’s experience matches what was found in the 2026 Newport/PLANSPONSOR NQDC Plan Trends Survey. Most plan sponsors (58%) surveyed by PLANSPONSOR and Newport said they experienced NQDC participation rates of less than 25%. The most cited participation barriers were lack of understanding (46%) and irrevocable election rules (27%).

In Harrick's view, one of the biggest disconnects is that participants focus heavily on deferral decisions without giving equal attention to distribution planning.

“There’s a lot of thought placed [at] the forefront on what I should defer and how much I should defer, but not so much on how I should take that distribution in the future,” he explains. “That’s a big deal in terms of the tax ramifications and how to do some planning around that.”

Although many recordkeepers offer educational resources and decision-support tools, Harrick believes those tools are often underutilized.

“We found that recordkeepers have some good tools on their platforms,” he says. “I just don’t know if participants get directed there.”

As a result, advisers have an important role to play in connecting participants with available resources and helping them make informed decisions.

“I think it falls on the adviser who could work with that provider to coordinate: What are the tools that we should emphasize and alert people to, to assist them in the process of their distribution and deferral decisions?” Harrick says.

Gredys agrees that participant understanding remains a major obstacle to broader adoption and utilization. Part of the problem stems from a lack of adviser education, he says. While recordkeepers may provide technical support when questions arise, advisers do not always receive sufficient training to proactively identify opportunities or explain plan features.

“A lot of times it’s being sold by salespeople,” Gredys says. “But the follow-up in terms of the education is limited.”

According to Gredys, better adviser education could help improve participation by making advisers more comfortable discussing deferred compensation strategies and explaining available plan options. He also believes wealth advisers can play an important role because they often have established relationships with key executives.

Specialist Providers Might Offer a Different Experience

Harrick sees a distinction between firms that specialize in NQDC plans and providers that offer NQDC services alongside qualified retirement plans.

In bundled relationships, he says, attention is often concentrated on the qualified plan, because those plans typically hold the greatest assets and drive broader retirement planning discussions. By contrast, firms dedicated to NQDC administration tend to focus exclusively on the success of those plans.

“We’re hypersensitive to making sure that plan is successful,” Harrick says. “When you have a bundled situation, I think there tends to be more focus on the qualified plan.”

As a result, Harrick says his firm regularly sees differences between bundled providers and specialty shops in terms of the attention devoted to participant engagement, education and overall plan success.

According to the 2026 PLANSPONSOR NQDC Market Survey, 26.7% of responding providers provide recordkeeping for plans subject to IRS Section 409A with the help of a partner or other third party.

Choosing the Right Recordkeeper Depends on Plan Needs

As NQDC plans become part of broader executive wealth and retirement strategies, Gredys says recordkeepers can no longer operate in isolation. Instead, providers need strong relationships with other firms and specialists involved in executive benefit planning.

“You have to have some relationships with other providers as well, because they’re all going to blend together,” Gredys says. “You can have a piece of the puzzle, as opposed to being isolated.”

This reflects a broader shift toward integrated financial planning, in which retirement plans, executive benefits, wealth management, estate planning and succession planning are increasingly viewed as interconnected components of a participant’s financial life, he adds.

For plan sponsors evaluating a new NQDC recordkeeper—or benchmarking an existing provider—Harrick says the first step is understanding the services the organization truly needs.

Larger providers may offer comprehensive capabilities that include plan administration, investment consulting, accounting support and participant services. However, not every plan requires that full suite of services.

“Plans that might be in the smaller to midsize range might not need that suite of services—and the cost that comes with it,” Harrick says.

Instead of focusing solely on provider size, sponsors should evaluate which responsibilities will be handled internally, by an adviser, or by the third-party administrator: “The plan sponsor needs to ask, ‘What do we need?’” he says.

When evaluating NQDC providers, Gredys says compliance expertise should be the first consideration. “You always want to start with compliance,” he says. “Do they know what they’re doing?”

Because NQDC plans are subject to specialized rules, including Internal Revenue Code Section 409A requirements, sponsors should look for providers with substantial experience with those regulations, rather than firms that treat NQDC plans as an occasional offering.

Beyond compliance, sponsors should evaluate the provider's consulting capabilities and willingness to customize plan design to meet organizational objectives. “Are they a one-trick pony, meaning this is all I’ve got?” Gredys asks. “Or am I going to be able to consult and be provided with the various options?” Customization can be particularly important in the NQDC market because plans are often designed to achieve specific executive retention, recruitment or retirement planning goals.

Ultimately, Gredys says sponsors should seek providers that combine technical expertise, consultative support and a demonstrated track record. “Compliance, consulting expertise and the ability to deliver some success stories,” he says. “Know that they’ve done this before.”

The Role of Advisers

One of the most important questions sponsors should ask themselves, according to Harrick, is whether they have an adviser focused specifically on their NQDC plan. “Most companies have a [qualified plan] consultant,” he says. “For nonqualified plans, the question would be, ‘Do I have a 409A consultant?’”

A dedicated adviser can support enrollment, participant education and communications—activities that Harrick believes are essential to a successful plan. “That adviser is probably going to handle enrollment, communication and help with education,” he says. “That’s going to be really important for the success of the plan.”

If a sponsor does not have specialized NQDC advice, Harrick says it becomes even more important to determine whether the recordkeeper or third-party administrator can provide those services.

Different Considerations for 457(f) Plans

Harrick also works with nonprofit organizations that sponsor 457(f) plans and notes that their objectives often differ from those of traditional corporate NQDC plans.

He characterizes many 457(f) arrangements as short-term incentive programs that commonly feature vesting schedules of three to five years and forfeiture provisions if employees leave before vesting. “We consider those short-term, incentive-type plans,” Harrick says.

Because of their design, he says, 457(f) plans are generally simpler to administer than the long-term deferred compensation programs commonly found in the for-profit sector. However, sponsors still need providers with specialized expertise.

“You want to make sure you work with a provider that can administer a 457(f) plan,” Harrick says. “I don’t think all of them do, but there are some specialty providers that handle that.”

For nonprofit organizations seeking longer-term executive benefit strategies, Harrick says 457(f) plans are often paired with other arrangements, such as split-dollar life insurance programs.

Respondents to the 2026 PLANSPONSOR Recordkeeping Survey reported they provide recordkeeping for 2,117 457(f) plans covering 28,478 participants.

Technology Can Help

Another area in which providers can add value, Harrick says, is through modeling tools that help participants understand future distributions and tax consequences.

NQDC participants frequently make distribution elections over many years, creating multiple payout schedules that can become difficult to manage as retirement approaches.

“When you get to retirement, all of a sudden, you’ve got these different tranches or lengths of payments,” Harrick says. “How do I put this together to make sense of it?”

Harrick says sponsors should look for recordkeepers that offer technology capable of helping participants model distribution scenarios and better understand the impact of their decisions.

Ultimately, he says, successful NQDC plans depend on more than plan design alone. Ongoing education, participant engagement and access to specialized advice remain critical to helping executives maximize the value of these benefits.

As NQDC plans continue moving further into the mainstream of executive benefit planning, Gredys expects education, collaboration and integration across advisory disciplines to become increasingly important to both providers and plan sponsors.

—Rebecca Moore