Nonqualified Deferred Compensation Plans: Practical and Tax Considerations

Taccino, Kenn B.
March 1994
Benefits Quarterly;1994 First Quarter, Vol. 10 Issue 1, p30
Academic Journal
One of the most effective tools available to employers and executives for compensation and retirement planning in the U.S. are nonqualified deferred compensation plans. A nonqualified plan is an employer-sponsored retirement program that discriminates in favor of executives and consequently is ineligible for the special tax advantages available to a qualified pension and profit-sharing plan. This article examines the viability of the non-qualified plan as an alternative to qualified plan. The author explores several business needs that nonqualified plans satisfy and the variety of plans that can be designed to meet these needs. The author also looks at the tax implications associated with plan funding and how to avoid unwanted tax consequences through the use of a rabbi trust.


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