The Total View - (Page 50) Meeting the Unique Needs of Plan Sponsors & Key Employees As the number one deferred compensation plan recordkeeper1, The Principal provided services for more than 3,800 nonqualified retirement plans that represented nearly 43,000 participants in 2006. This is approximately a 10 percent increase in the number of plans from 2005 and a 15 percent increase in the number of participants. The most common nonqualified plan offered by plan sponsors is the Executive Bonus & Split Dollar plan. While offered by 52 percent of plan sponsors, it only represented 20 percent of participants. The plans offered to a majority of the participants, representing 36 percent of plan sponsors, were nonqualified DB and nonqualified DC plans. The remaining 12 percent of plan sponsors and 26 percent of participants were covered by 457 plans. In 2006, approximately 85 percent of NQ plans offered were NQDC plans The next most popular plan was a nonqualified Defined Benefit (NQDB) plan (52 percent). Nonqualified plans can play an important role in attracting and retaining key employees. This was particularly true for large corporations. Companies with more than 1,000 employees had a significantly higher presence of NQ plans. 1 Industry Percent of DC plans with a NQ plan, by plan size 60% –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 55.2% 50% –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 41.7% 40% –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 30% –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 28.2% 20% –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 17.3% 10% –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 8.1% 7.1% 0% –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1 - 49 50 200 1,000 5,000+ All Plans 199 999 4,999 The larger an organization’s defined contribution plan, the more likely the organization was to have a nonqualified plan for highly compensated employees. Source: Profit Sharing Council of America (PSCA) 50th Annual Survey of Profit Sharing and 401(k) Plans. Fast Fact NQDC plans are most commonly offered to help retain key employees and to provide executives with a retirement benefit. Based on number of plans records kept (including 401(k) mirror plans), PLANSPONSOR deferred compensation provider stats, PLANSPONSOR.com, December 2006. 2 PLANSPONSOR magazine, “NonQualified Deferred Compensation Survey: Purpose Full”, January 2007. 50
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