Where a traditional plan runs out of room.
A 401(k) is a valuable tool, but its annual deferral cap — $23,500 for 2025, plus catch-ups — often covers only a fraction of a key executive's pay. Nondiscrimination testing can limit highly compensated employees further when broader participation is low.
Nonqualified deferred compensation and executive benefit plans fill that gap, letting select employees defer a larger — often unlimited — portion of their compensation on a tax-deferred basis. They give you a strategic way to reward leadership and close the savings gap the qualified plan leaves open.
Compete on more than salary.
Key earners can defer a larger — often unlimited — share of pay beyond the 401(k) cap, on a tax-deferred basis.
Vesting schedules and performance-based payouts act as golden handcuffs that reward continued commitment.
Tie incentive compensation directly to individual, team, or company-wide results to drive a results-driven culture.
Future financial incentives tied to employment align your most valuable people with the company’s long-term success.
Where the qualified plan runs out.
Contribution and compensation caps mean a 401(k) alone replaces a shrinking share of income as pay rises. That gap is exactly why leading employers layer a nonqualified plan on top.
Of Fortune 1000 companies offer a nonqualified deferred compensation plan to some or all key employees.
Source: OneDigital, citing industry data (2026).
Of employers offering an NQDC plan do so to keep their benefits package competitive for top talent.
Source: PSCA 2024 NQDC Plan Survey (85.2%).
IRS cap on the pay that can count toward a qualified plan in 2026 — compensation above it can't be deferred or matched there.
Source: IRS 401(k) contribution limits (2026).
Figures reflect the referenced sources as of the dates noted and are provided for general educational purposes; survey results vary by methodology, sample, and year, and IRS limits are adjusted annually. This is not tax, legal, or investment advice. Nonqualified deferred compensation involves risks — including the employer's creditors — that differ from a qualified 401(k); consult a qualified advisor about your situation.
Three ways to reward your key people.
These plans are rarely one-size-fits-all. We match the structure — or combination — to the outcome you're after.
Select employees defer salary, bonuses, or other pay into a plan that postpones income tax until a future date — with no IRS-imposed contribution limits.
Reward top performers by tying additional compensation to measurable outcomes — revenue targets, milestones, retention, or strategic goals.
A simple, flexible arrangement: the business pays a bonus the employee uses to fund a personally owned life insurance policy or investment account.
Inside a deferred compensation plan.
Unlike a 401(k), there are no IRS-imposed caps on how much select employees can defer.
Deferral elections must be made before the year in which the compensation is earned, under Section 409A.
Employers may add matching or discretionary contributions, which follow the same tax-deferred treatment.
Deferred amounts stay part of the company’s general assets and are tracked in a notional account for the employee.
Informally funded, thoughtfully secured.
NQDC plans stay part of your general assets to preserve their tax treatment — but you don't have to leave future liabilities unmanaged. We help you set aside assets to meet them with confidence.
A consultative path from goals to go-live.
A specialist, not a generalist.
Many advisors understand these plans only at the surface and lean on the recordkeeper for answers. For us, executive benefits are a core discipline.
A dedicated NQDC consultant on staff who has completed NAPA’s NQPC program to ensure a high-quality experience.
Executive benefits are one of our core disciplines — not a surface-level add-on to a broad practice.
We maintain relationships with several leading NQDC providers and collaborate to recommend the best fit.
These plans are complex; our team guides participants so they fully understand and appreciate the benefit.
Questions employers ask.
Let's design a plan around your key people.
A short consultation surfaces the challenges you're solving for — and the plan structures that fit your goals, workforce, and ownership picture.