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Successive NQDC Plans


Guest rjohnson

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Guest rjohnson

An employee is set receive benefits under a NQDC plan adopted long ago with no option of changing payout at this point. Employee is fine with getting in-service distributions (no choice), but wants to continue working, and employer wants to continue the NQDC plan.

Any objection to starting a new, separate plan for the employee? The existing plan will be in payout mode, with no further deferrals being made. The new, separate plan will accrue some benefits and vest in a few years to provide more benefits when the employee actually does want to retire.

I don't think they'll aggregate because only one is accepting deferrals. It will be a standalone plan that will be enforced by the employer.

Any issues?

Any thoughts on how to adjust the existing plan without creating a new one?

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I’ll leave it up to the attorneys to respond to IF you can do this with no issues. My question from a value proposition perspective in WHY you and the executive would want to do this?

Today there are workplace facilitated institutionally priced after-tax tax-advantaged options for executives designed as secure complements to NQDC and for their life-after-career personal cash management of plan distributions.

As long as the individual earns $110,000+ and performs a “white-collar” role in the workplace – they qualify.

Employer has no costs, liabilities, DOL or ERISA issues or administrative responsibilities – merely validate the employee's employment and compensation for access qualification. A third-party sponsored and administered HCE class cash management program.

As you are considering options, one of the more efficient options today for both HCE's and employers is to not sponsor another benefit plan, but to recognize HCE career and class achievement and make the HCE aware of their STAR qualification.

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Guest rjohnson
I’ll leave it up to the attorneys to respond to IF you can do this with no issues. My question from a value proposition perspective in WHY you and the executive would want to do this?

Today there are workplace facilitated institutionally priced after-tax tax-advantaged options for executives designed as secure complements to NQDC and for their life-after-career personal cash management of plan distributions.

As long as the individual earns $110,000+ and performs a “white-collar” role in the workplace – they qualify.

Employer has no costs, liabilities, DOL or ERISA issues or administrative responsibilities – merely validate the employee's employment and compensation for access qualification. A third-party sponsored and administered HCE class cash management program.

As you are considering options, one of the more efficient options today for both HCE's and employers is to not sponsor another benefit plan, but to recognize HCE career and class achievement and make the HCE aware of their STAR qualification.

What?

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  • 1 month later...
Guest taxesquire
An employee is set receive benefits under a NQDC plan adopted long ago with no option of changing payout at this point. Employee is fine with getting in-service distributions (no choice), but wants to continue working, and employer wants to continue the NQDC plan.

Any objection to starting a new, separate plan for the employee? The existing plan will be in payout mode, with no further deferrals being made. The new, separate plan will accrue some benefits and vest in a few years to provide more benefits when the employee actually does want to retire.

I don't think they'll aggregate because only one is accepting deferrals. It will be a standalone plan that will be enforced by the employer.

Any issues?

Any thoughts on how to adjust the existing plan without creating a new one?

You can have 1 executive in multiple NQPs. There are no deferral/contribution limits so aggregation is not an issue. It is common for executives to be subject to multiple deferred comp arrangements, though usually one is called an "employment contract" with severance provisions and another is called a deferred comp plan.

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