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Nonqualified Deferred Compensation Plans

Designed for highly compensated key employees, nonqualified deferred compensation (NQDC) plans are employer-sponsored benefits that address retirement and other savings needs. NQDC plans, with some exceptions such as 457(b) plans, must comply with the rules of Section 409A of the Internal Revenue Code generally applying to the timing of deferrals and distributions. 

Using either a defined contribution or defined benefit plan design approach, NQDC plans offer pre-tax deferral of participant compensation or employer contributions depending on plan type and plan design.  

  • For participants, pre-tax deferrals may reduce current taxable income, while potential earnings in the plan are tax deferred.  
  • For employers, these plans meet organizational needs to recruit, reward, retain and retire key employees.

View this resource to assess your knowledge of nonqualified deferred compensation plans. To learn more, review the Deferred Compensation Capabilities Brochure (BB9406).

Principal is the No. 1 provider of nonqualified deferred compensation plans*.

* Based on total number of Section 409A plans and non-governmental 457 plans, PLANSPONSOR 2017 NQDC Recordkeeping Survey, June 2017.

Important Information

Before investing in mutual funds or variable life insurance, investors should carefully consider the investment objectives, risks, charges and expenses of the funds or policy and the underlying investment options. This and other information is contained in the free prospectus and, if available, the summary prospectus, which 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.

Investing in mutual funds or variable life insurance is subject to market risk, including the potential loss of the principal invested.


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