A Non-Qualified Deferred Compensation (NQDC) plan lets high-income executives defer receipt of salary or bonus to a future year, potentially at a lower tax bracket in retirement. These plans are governed by IRC Section 409A. Deferral elections must be made 12 months before the performance period (six months for bonus), and the distribution schedule you elect up front can’t be changed. One key risk: NQDC balances are unsecured creditor claims, so you have no protection if your employer files bankruptcy. Weigh the tax savings against that risk before deferring.
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