Hello Marie Monroe,
Very quickly, I have nearly 35 years of VP or above level of experience at two of the largest NQDC specialists.
I have bad news and good news.
First, the bad news:
Assuming the situation involves a for-profit company, NO you CANNOT have an NQDC that is not a TOP HAT plan - thereby allowing you to cover a broad group of employees. If your plan doesn't meet TOP HAT requirements, it will cause the plan to be treated as ERISA plan which means any assets earmarked for the plan would cause it to be funded for ERISA purposes. This would certainly trigger ERISA's concept of "beneficial ownership interest", which in turn would trigger the IRS' concept of economic benefit or of constructive receipt - meaning your participants would be taxed currently. This would lead to violations of 409A, penalties, interest, etc. etc., and the biggest fear if you have more than 30 such participants, the possibility of a class action lawsuit for the taxes and penalties each participant would have.
A bad deal.
Over 90% of companies with revenues of $750MM and up have deferred compensation plans at this point. And such a plan may be good for your company. Now the good news:
While you cannot have an nqdc to accomplish this, you CAN accomplish it through a compensation program. The design can be similar to an NQDC, but it must appropriately not be tied to retirement, so that it is a compensation program and not a retirement program. So, it is "do-able", but with some extra details, care and design. You might even be able to administer it with your NQDC, so long as you are careful about the overall plan design and administration.
Hello Marie Monroe, Very quickly, I have nearly 35 years of VP or above level of experience at two of the largest NQDC specialists. I have bad news and good news. First, the bad news: Assuming the situation involves a for-profit company, NO you CANNOT have an NQDC that is not a TOP HAT plan - thereby allowing you to cover a broad group of employees. If your plan doesn't meet TOP HAT requirements, it will cause the plan to be treated as ERISA plan which means any assets earmarked for the plan would cause it to be funded for ERISA purposes. This would certainly trigger ERISA's concept of "beneficial ownership interest", which in turn would trigger the IRS' concept of economic benefit or of constructive receipt - meaning your participants would be taxed currently. This would lead to violations of 409A, penalties, interest, etc. etc., and the biggest fear if you have more than 30 such participants, the possibility of a class action lawsuit for the taxes and penalties each participant would have. A bad deal. Over 90% of companies with revenues of $750MM and up have deferred compensation plans at this point. And such a plan may be good for your company. Now the good news: While you cannot have an nqdc to accomplish this, you CAN accomplish it through a compensation program. The design can be similar to an NQDC, but it must appropriately not be tied to retirement, so that it is a compensation program and not a retirement program. So, it is "do-able", but with some extra details, care and design. You might even be able to administer it with your NQDC, so long as you are careful about the overall plan design and administration.