myNQDC | Distributions : Payout Basics

Distributions : Payout Basics

Articles

NQDC Distributions: Learn The Rules Before It’s Too Late

by Bruce S. Brumberg

Understanding the distribution (i.e. payout) rules is crucial for getting the maximum value from your participation in a nonqualified deferred compensation (NQDC) plan.

Read the rest of this article...

Job Loss: How It Affects Your Nonqualified Deferred Compensation

Opportunities And Risks: The Role Of Nonqualified Deferred Compensation In Your Financial Planning (Part 2)

UPDATES! The Terms Of Your Company’s NQDC Plan: What You Can Expect (Part 2)

FAQs

Can personal creditors reach or garnish my nonqualified deferred compensation distributions?

While the issue of whether all the distributions can be garnished remains open, you cannot rely on ERISA protections…

Read the rest of this answer...

What is an in-service distribution?

This is one of the major advantages of an elective nonqualified deferred compensation plan over a 401(k) or 403(b)…

Read the rest of this answer...

More FAQs:

Is there a difference between triggering a distribution and accelerating it?

If I am not certain about when I should take my distributions, when should I elect to receive them?

UPDATES! What if I have a financial or medical hardship? Can I get a distribution?

Can I get a distribution in stock?

Can my distribution be linked to a formula?

Can I elect a different timing for just a part of my already scheduled future distributions, or must my subsequent deferrals all be treated the same?

Can I get a distribution at any time and just take a “haircut” on it by paying a penalty to my company, or is that only for grandfathered plans?

Can I accelerate my distributions to withdraw the money earlier?

If the distribution is not made at the exact time specified in the plan, how much earlier or later than the scheduled distribution date can I receive the payment without being penalized?

Can I change the timing or form for just part of my scheduled distribution, or even just one installment payment?

Are the rules different if I change the timing of an installment distribution?

How do I change the timing or form of my distribution?

UPDATES! At distribution, will I receive a lump sum of cash, or will I get installment payments over a number of years?

Do I need to reach a certain age to receive distributions? Is there a particular age when I must start receiving distributions?

Can I get distributions of my deferred compensation whenever I want?

Are the taxes I owe at distribution based on the value of the amount I deferred at the start or on the value of the distribution I receive?

Do I have to pay federal unemployment tax (FUTA) on my NQDC distributions?

Will I owe any income taxes when I elect to participate, when my income is deferred, or when I receive distributions?

Can I easily postpone or accelerate distributions?

Do I need to defer all of the distributions to the same year?

Do I need to elect the percentage I defer, the year when it will be distributed, and the form of payment when it is distributed?