NQDC Plan defined

[B21]

I may be oversimplifying my interpretation of a NQDC plan, but it's my understanding that basically an arrangement where a select group of employees will be eligible to receive wages on a future date upon the occurrence of a certain event(s). Therefore, would both the following arrangements constitute a NQDC plan?

1. Employee elects to defer a portion of his/her current salary to be paid at retirement or upon termination of employment.
2. Employer agrees to pay employee $100,000 annually for 7 years upon retirement. No employee deferral contributions.

[jpod]

For what purpose are you seeking a definition of NQDC? For Code Section 409A purposes? For general conversational purposes?

[masteff]

I googled "nqdc irs code" and found this link: http://www.irs.gov/Businesses/Corporations/Nonqualified-Deferred-Compensation-Audit-Techniques-Guide-(02-2005)

Edited to fix the link

[B21]

The purpose for my question is both to get a general understanding of what qualifies as a NQDC arrangement & then to determine which ones are subject to 409A. The IRS link is helpful & should point me in the right direction. Thanks to to the both of you.

[Guest Taxxy McTaxerson]

If you are looking for what the IRC views as NQDC, it is generally any compensation paid more than 2.5 months after the year in which it is earned that is not held in a qualified plan. There are, of course, a host of exceptions to that broad generalization (particularly under 409A) but that is the general principle.