How Non-Qualified Deferred Compensation Plans Work

A non-qualified deferred compensation (NQDC) plan allows a service provider to earn wages, bonuses, or other compensation in one year but receive the earnings—and defer the income tax on them—in a later year. Doing this provides income in the future (often after they've left the workforce), and may reduce the tax payable on the income if the person is in a lower tax bracket when the deferred compensation is received. READ MORE