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Atila, some employers use a set of plans' designs and elections that run in the opposite direction: Before the beginning of a year, a participant irrevocably elects deferrals under an unfunded nonqualified deferred compensation plan. That plan provides that the amount that is the lesser of the year's deferrals or the amount that could be allocable to the participant's account under the 401(k) plan is distributed to the participant by March 15 of the year after the year for which the deferral was made unless the participant had irrevocably elected (before the beginning of the year for which the participant earned the compensation) to treat that amount as deferrals under the 401(k) plan. Parallel provisions govern the matching contributions. IRS Letter Rulings 95-30-038, 97-52-017, 97-52-018, 1999-24-067, 2000-12-083, 2001-16-046. An employer considering such a design should consider that not everyone who is a highly-compensated employee for the 401(k) plan necessarily can be a select-group employee for an unfunded plan. A participant considering the elections described above should carefully evaluate the risks of the employer's unsecured promises and creditors' access to amounts not held under the 401(k) plan. Also, this requires picture-perfect drafting of the documents and elections.

This is a really stupid idea. If the employer is going to the trouble of maintaining a nonqualifed plan, it should not be limited in such a complicated way. Among other things, it is an invitation to mistakes in the plan