Howdy Ags, last year I became eligible to participate in my employer's nonqualified deferred compensation plan but tbh I missed the deadline because I wanted to educate myself on what this is but never got around to it.

It is now open enrollment and I'm looking for you smart Ags to please explain this to me like I'm five

I have two weeks to enroll.

Good to know but don't think I would have to worry about that with my employer.

Every plan is different, but in general...You save taxes at today's very reasonable rates and brackets, the money doubles every 7-9 years, and then you pay potentially higher rates on a bigger amount in the future.

Sometimes if you quit or get canned, it all pays out in one year and not over time like you'd planned. Sometimes you have to keep it in company stock until retirement age. Sometimes if you work for AT&T, it's an awesome plan that you only have to defer for 365 days and they match it and would be dumb not to max out.

mosdefn14 said:

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Every plan is different, but in general...You save taxes at today's very reasonable rates and brackets, the money doubles every 7-9 years, and then you pay potentially higher rates on a bigger amount in the future.

Sometimes if you quit or get canned, it all pays out in one year and not over time like you'd planned. Sometimes you have to keep it in company stock until retirement age. Sometimes if you work for AT&T, it's an awesome plan that you only have to defer for 365 days and they match it and would be dumb not to max out.

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My experience is having a plan that required it be in company stock, and required keeping it in the plan until retirement OR change of control (acquisition by another company). My company was acquired, I had to pay taxes on the constructive receipt of the stock, and the acquirer nearly drove the company into the ground in less than a decade. I still hold the stock, and am selling it piecemeal by using portions as a significant (90%+) capital loss to offset capital gains this year going forward. It did not go as planned

But, EnronAg may or may not have an even sadder story (I hope not). I had several Enron friends who were virtually wiped out, financially.

NQDC plans are great. Take advantage of it if you can.

I know you aren't worried about the company going bankrupt, but there is insurance available against something like this if it were a concern.

This is helpful. Thanks all.

FYI not all companies require it to be in company stock. Mine has investment options like any 401K.
Each year when you sign up (at least at my company), you choose how to get paid out upon separation (immediate lump some. or over 1-10 years).

Ours let's us invest in a broad set of funds too. And we can choose lump sum payout at some point in the future our up to payout annually up to 15 years beginning at retirement.