Important legal information about the email you will be sending. By using this service, you agree to input your real email address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an email. All information you provide will be used by Fidelity solely for the purpose of sending the email on your behalf. The subject line of the email you send will be "Fidelity.
Have you maxed out your k or b workplace savings plan, but still want to save more for retirement or other goals? If your employer offers a nonqualified deferred compensation NQDC plan, you might want to explore this option. NQDC plans allow executives to defer a much larger portion of their compensation, and to defer taxes on the money until the deferral is paid. NQDC plans have the potential for tax-deferred growth, but they also come with substantial risks, including the risk of complete loss of the assets in your NQDC plan.
We strongly recommend that executives review their NQDC opportunity with their financial adviser. An NQDC plan is more like an agreement between you and your employer to defer a portion of your annual income until a specific date in the future.
Depending on the plan, that date could be in five years, 10 years, or in retirement. You can decide how much to defer each year from your salary, bonuses, or other forms of compensation. Deferring this income provides one tax advantage: Most companies provide NQDC plans as an executive retirement benefit, because k plans often are inadequate for high earners.
By contrast, the executive could choose to set aside a much larger percentage of his or her salary into an NQDC plan each year, creating an appropriate retirement cushion. But there are downsides to NQDC plans. Unlike a qualified plan, where benefits are segregated from the employer's general assets, your deferred compensation deferred into the NQDC remains the employer's general assets and is subject to potential loss.
The plan essentially represents a promise by the company to pay you back. At most, the company may set aside money in a trust called a rabbi trust to pay future benefits when they become payable.
You also can change your deferral amount from year to year. To get the most benefit out of an NQDC plan, you must give careful thought to your deferral strategy, investment options, and distribution plan. Non-qualified distribution investing and Distribution strategies delve into how to approach those decisions. Here are six important questions to ask yourself when deciding whether an NQDC plan is right for you:. Giving thought to the preceding questions may help you decide whether an NQDC plan is a good fit for your financial needs.
Reasons for a Roth IRA. That's why you need to see how you are doing now. View all Saving for Retirement articles. Skip to Main Content. Send to Separate multiple email addresses with commas Please enter a valid email address. Your email address Please enter a valid email address. The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice.
Fidelity does not provide estate planning, legal, or tax advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Fidelity does not assume any obligation to inform you of any subsequent changes in the tax law or other factors that could affect the information contained herein.
Fidelity makes no warranties with regard to such information or results obtained by its use. Fidelity disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation. Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness.
A percentage value for helpfulness will display once a sufficient number of votes have been submitted. Please enter a valid e-mail address. Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.
The subject line of the e-mail you send will be "Fidelity. Your e-mail has been sent. Related articles 5 important rollover questions Consider cost, investments, services, and convenience.
Roth conversions Learn about Roth conversion taxes—and when to consider a "do over. Please enter a valid ZIP code. Ability to take early withdrawal at any time, paying taxes and a penalty on the withdrawal amount. Also, participants may keep balances in plan well after normal retirement age. Upon job loss, the participant can roll money over to an IRA or transfer to a new employer's qualified plan.More...