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NQDC Plan Participation Continues to Grow

April 21, 2021

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Plan Sponsor Council of America logo

Plan Sponsor Council of America (PSCA) has released the results of its recent study on nonqualified deferred compensation (NQDC) plan participation. The findings show that roughly 66 percent of nonqualified deferred plan eligible employees participated in employer NQDC plans in 2020, in contrast to the 53.4 percent of employees who participated in their organization’s NQDC plan per the PSCA’s 2018 study.

The study further shows that the NQDC plan participation documented by the 2020 study, accounted for deferral of, on average, 10.5 percent of the employee’s base pay. The study by PSCA, an umbrella group of the American Retirement Association (ARA), surveyed more than 100 nonqualified deferred compensation plans offered in 2020. The majority of employers that offer NQDC plans stated that enhancing recruiting and retention of talent is one of the primary reasons they offer the plans.

PSCA Nonqualified Plan StudyPreviousCurrent
Eligibility5.2% Total employees eligible
6.1% Total employees eligible
Participation≈ 50% Eligible employees
66% Eligible employees
Employer Contribution Formula30% of plans offer restoration
match designed to fill the
gap created by 401(k) plan limits
30% of plans offer restoration
match designed to fill the
gap created by 401(k) plan limits
Education55.6% Provide plan-specific education
>70% Provide plan-specific education

Education Supports NQDC Plan Participation

The survey also revealed positive growth in the number of plan sponsors who recognize the importance of employee education regarding NQDC plans. The PSCA 2018 survey showed 55.6 percent of organizations providing education specific to NQDC plans. That number, per the 2020 survey, is now up to over 70 percent.

“Providing employees with investment advice related to NQDC plans has almost doubled, based on the Plans Sponsor Council of America’s  findings,” said Bruce Brownell, Senior Vice President Retirement, Fulcrum Partners, a OneDigital Company. “As organizations strive to partner better with employees, positioning them for effective retirement planning, education is critical.”

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.

Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through Lion Street Advisors, LLC (LSA) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI and LSF/LSA are non-affiliated entities and separate entities from OneDigital and Fulcrum Partners.

Unless otherwise noted, VAI/VSI, LSF/LSA are not affiliated, associated, authorized, endorsed by, or in any way officially connected with any other company, agency or government agency identified or referenced in this document.

Lion Street Advisors // Lion Street Financial

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