Taxes
4 months ago
How does a deferred compensation plan work and what are the risks?
24
My employer (a large public company) offers a non-qualified deferred compensation plan. I can defer up to 50% of my salary and 100% of my bonus. The money grows tax-deferred and I choose when to receive distributions. This sounds great for tax planning, but I've heard NQDC plans aren't protected like 401ks — if the company goes bankrupt, I'm an unsecured creditor. How real is this risk with a Fortune 500 company? Is the tax benefit worth it?
DR
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