In the Spotlight
In the Spotlight
Explore how we can help youWork with us
Recently, more companies have expressed interest in adding non-qualified deferral plans to provide more tax-deferral opportunities for high-income employees who may be impacted by proposed tax changes. Additionally, we’ve seen companies expanding current plans by increasing salary and bonus deferral limits, as well as adding the option to defer certain long-term incentive awards.
“85% of companies that offer a plan are publicly traded.”
Source: Ayco Benefits & Compensation. Data is based on review of 310 Ayco Corporate partners as of January 2022.
The majority of companies we work with currently offer non-qualified plans to senior management levels. However, a newer trend we've seen is offering these plans to a wider group of employees. Typically, enrollments take place in the fall, with active elections required each year. 1
For most companies, deferrals start at the beginning of the year (sometimes referred to as a “first-dollar” plan). As a result, they can impact qualified plan benefits, which is a critical planning consideration for executives. Companies have traditionally offered the ability to defer both base salary and bonus—but we’re seeing a growing trend of companies adding the ability to defer certain long-term incentive awards, such as RSUs and PSUs. 1
Investment options differ by employer but often are similar to the company’s qualified 401(k) plan.1
Over 90% of our corporate partners allow employees to elect both the timing and form of distribution, which provides employees the opportunity to allocate funds toward different goals. While we see a variety of timing elections permitted, the majority of plans include at least a retirement and in-service distribution option. A growing number of companies are adding a separate distribution election for unexpected events, including a change in control, disability and other early terminations. In terms of payment options, the vast majority of companies allow for installment payments over 10 years or more, which may enable employees to avoid non-resident state income tax (depending on where they live). 1
Offering a comprehensive financial wellness benefit reflects your company’s culture and shows your employees you value them. Interested in empowering your employees to take control of their financial lives? Learn more about how Ayco can help.
1 Source: Ayco Benefits & Compensation. Data and information is based on review of 310 Ayco Corporate partners as of January 2022.
Updated for tax year 2022