Informal Funding Strategies for Nonqualified Plans

This guide evaluates informal funding strategies for nonqualified deferred compensation (NQDC) plans as employer obligations evolve. It outlines the complexities that arise as nonqualified plans mature, prompting employers to reconsider their funding approaches. The document discusses various funding methods, including cash approaches, insurance strategies, and taxable securities, highlighting the importance of adapting funding strategies to align with changing business conditions and workforce dynamics. Key considerations for employers include managing future cash flow needs, income statement volatility, and long-term sustainability of the plans. The guide also addresses the role of corporate-owned life insurance (COLI) in funding strategies, emphasizing the need for careful evaluation of factors such as participation stability, cash-flow objectives, and governance readiness. Overall, it presents a framework for organizations to reassess their funding strategies to ensure they meet evolving obligations and business goals.