NQDC plan funding considerations

Flexible funding options

Once we understand your objectives for a nonqualified deferred compensation (NQDC) plan and have designed the program, we need to consider what method will best fit your organization’s needs and financial profile.

NQDC plan dollars are assets of the company sponsoring the plan until the deferred compensation assets are paid out to the participant who deferred them. Because these are corporate assets, they are subject to taxation by the IRS. Due to this fact, special consideration is taken on what method the employer should take to fund the plan.

USI Consulting Group (USICG) will analyze all the funding options available to determine what works best based on your business goals and total rewards strategy.

Executives are general creditors of the company until the compensation is paid Liability for deferred compensation accrues on the company’s books until paid	As emerging liabilities grow, issues may arise Decision to fund and type of funding unique for each company factors considered include: Cash Flow Earnings Impact Asset/Liability Tracking Flexibility After-Tax Return Security Mutual Funds COLI/BOLI Split Dollar Life Insurance	Assures availability of cash to pay future benefits Security for participants in change of heart or change of control Assets can only be reverted to company in event of bankruptcy or insolvency