Deferred Comp - Defined Contribution
The Principal® Deferred Compensation - Defined Contribution plan allows select key employees to defer income in excess of the qualified plan limitations up to 100% of their income on a pre-tax basis. It helps bridge the retirement income gap that highly compensated employees (HCEs) often face with qualified employer retirement plans.
Employers can also make discretionary contributions into the plan to address recruitment and retention goals.
View Employer Summary (BB8915) to review the benefits and considerations of this plan for plan sponsors and participants.
Get started with the Nonqualified Excess Plan Sales Process Guide (BB10080) (temporarily unavailable).
Target employers that display most of the following attributes:
- Business entity (public/private C corporations can be beneficial, pass through entities for non-owners also an option)
- Good business continuity
- Good financial situation (profitable, good cash flow)
- Highly compensated employees with retirement income gap and/or income deferral needs
- Willingness to provide a solution for key employees
For Plan Participants
- Participants have the opportunity to defer compensation in excess of qualified retirement plan limits on a pre-tax basis.
- Ability to design an individualized investment strategy.
For Plan Sponsors
- The company can make discretionary incentive contributions to recruit, retain and reward selected key employees.
- Assets accumulated to finance the plan remain an asset on the company’s balance sheet.
- Flexible plan design and multiple financial options available.
- The plan is simple to administer and requires no discrimination testing, minimum participation or Form 5500 filing, if set up properly.
Deferred compensation plans are unfunded contractual obligations to pay benefits to a plan participant in the future. The employer can choose to informally finance the future obligation or leave the obligation unfinanced. The best financing method is dependent on the employer’s financial characteristics and the degree of risk that is acceptable to plan participants and the employer.
Financing and Investment Capabilities Brochure (BB9784)
Demonstrates the ability of Principal® to help clients simplify the financing and investment aspects of their deferred compensation plans.
View (PDF) • Order
For more information: Corporate Owned Life Insurance (COLI) • Taxable Investments (login required)
For those employers choosing to informally finance the plan, most offer a range of investment options and allow their plan participants to choose reference investments among multiple fund families and money managers. This allows plan participants to choose reference investments that fit their specific objectives and risk tolerances.
Key deferred comp sales ideas and success stories below. View all key employee retention and retirement success stories. In addition, other sales approach tools are also available.
Primary Uses of Nonqualified Deferred Compensation Brochure (BB9720) or Presentation (BB11557)
Use the brochure and presentation to demonstrate to prospective employers six primary examples of how deferred compensation plans can benefit them.
View Brochure (PDF) • Order • View Presentation (PPT)
Failed Qualified Plan Testing Approach Letter (BB12000) or Email Template (LF296)
Send this letter or email template to your clients that may have issued qualified plan refunds or failed qualified plan participation testing
View (DOC) • Get email (OFT)
Employer Contributions in NQDC Plan Flyer (BB10293)
Shows plan sponsors how employer contributions can be an effective part of NQ deferred comp plan designs.
View • Order
Take a Second Look Flyer (BB8940)
Present this flyer to your clients with existing deferred compensation plans in order to encourage them to evaluate whether their plan is meeting their business needs. Use this as a springboard to sell the comprehensive services of Principal.
View • Order
Key materials listed below.
Before the Sale
Deferred Compensation Capabilities Brochure (BB9406)
Present the comprehensive plan-level experience and administrative plan services that Principal® provides for its deferred compensation plan employer clients.
View (PDF) • Order
Nonqualified Deferred Compensation Leadership Flyer (BB9750)
Demonstrate the deferred comp capabilities of Principal with leadership and financial strength statistics.
View (PDF) • Order
Employer Summary (BB8915)
A one-page plan overview that includes qualified limitations and outlines plan benefits and considerations.
View (PDF) • Order
New Plan Business Opener (Customizable) (BB9467C) & Opener PowerPoint (BB11548)
This marketing piece is designed to introduce companies to the Deferred Comp - Defined Contribution plan. To create a customized electronic file, select “Order” below.
View (PDF) • Order • View Presentation (PPT)
Existing Plan Business Opener (Customizable) (BB9658C) & Opener PowerPoint (BB11261)
Introduce the deferred compensation capabilities of Principal to clients with existing plans. To create a customized electronic file, select “Order” below.
View (PDF) • Order • View Presentation (PPT)
During the Sale
Proposals
New and existing plan proposals may be customized for your clients. Customizable content includes client and producer details, financial model, Principal Total Retirement SuiteSM information and Principal Trust CompanySM information. To request a proposal, contact your RVP-NQP.
Engagement Agreement (BB10291)
Once the client is ready to use our in-depth plan design consulting, complete this agreement and return with engagement fee.
View (DOC)
After the Sale
NQDC Summary of Services (NQ23)
Outlines core and optional administrative services available.
View (PDF)
Plan Sponsor Roles and Responsibilities Guide (NQ55P)
Explores the opportunities plan sponsors have to make the most of a plan, both immediately after implementation and on an ongoing basis.
View (PDF)
NQDC Implementation & Enrollment
Access materials for use in the plan implementation process, including business submission guidelines, participant materials and sample agreements.
Go to NQDC New Business Enrollment
Key materials listed below.
Nonqualified Excess Plan Sales Process Guide (BB10080)
This introduction piece gives an overview of how to sell a deferred comp - defined contribution plan and how our materials can facilitate that process.
(Temporarily unavailable)
Prospecting Characteristics (BB10580)
Use this form to determine which plan is most appropriate for your client.
View (PDF)
NQ Discussion Tracks (BB10227)
Discussion tracks to use in conversations with prospective NQ clients.
View (PDF) • Order
Countering Common Objections Flyer (BB10547)
Use this piece to overcome clients' hesitations about nonqualified plans and help them make an informal decision.
View (PDF) • Order
Advanced Markets Information
Technical material for applied knowledge on a specific topic.
View Advanced Markets Information
- Contact Us: RVP-NQP
Important Information
When we use the term “money manager,” we may be referring to an investment advisor or sub-advisor of an underlying mutual fund.
Before investing in mutual funds or variable life insurance, investors should carefully consider the investment objectives, risks, charges and expenses of the funds or the policy and the underlying investment options or online at www.principal.com. This and other information is contained in the free prospectus and, if available, the summary prospectus that can be obtained from your local representative or online at www.principal.com. Please read the prospectus and, if available, the summary prospectus carefully before investing.
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