NQDC Plan Participation Hits New Heights

Participation in nonqualified defined contribution plans reached unprecedented levels in 2025, according to findings from the 2025 Nonqualified Deferred Compensation Plan Survey, released Wednesday by the Plan Sponsor Council of America. The PSCA found that 69.8% of eligible executives participated in an NQDC plan in 2025, up from 61.2% in 2024.

“Nonqualified plans remain a critical tool for organizations seeking to attract, retain and align senior leadership,” said PSCA Executive Director Will Hansen in a statement.

Tax provisions in the One Big Beautiful Bill Act and recent changes to IRS limits have led to greater interest in NQDC plans. Surveyed benefits decisionmakers recently told NFP that offering NQDC plans as a part of a benefits package was a valuable part of their executive compensation, and most said they used it to retain talent.

When PSCA asked employers their top reasons for offering NQDC plans, 85.9% responded that they wanted a competitive benefits package, and 56.3% said it helps eligible employees accumulate assets.

Two-thirds of survey respondents said they set assets aside to meet future obligations. Of those who said they set assets aside, 90.6% use a rabbi trust, which holds assets earmarked for employee benefits while remaining subject to the employer’s creditors.

Employers’ NQDC plans had similar investment options to their defined contribution plans, according to the PSCA survey. Almost 40% of NQDC plans had the same investment options as corresponding qualified DC plans, and about one-third had a similar lineup.

Plan sponsors also had strong approval for their NQDC plans, as 78.8% of employers said they were satisfied or very satisfied with their current NQDC plan structure and how it met organizational objectives. Participant satisfaction was even higher, with 80.5% of participants saying they were satisfied or very satisfied with their NQDC plan.

As for salary deferral, participants said they deferred an average of 10% of their base salary and 23% of bonus pay. The survey also found that 72.9% of employers said they allow distributions at separation of service, and 64.3% said they permit distribution at a specified date elected by the participant for specific reasons in service.

Employers from the PSCA survey also showed interest in increasing education about NQDC plans for their employees. In a 2024 Newport survey on NQDC plans, 72% of responding plan sponsors said they wanted to improve participant communication and education about their NQDC offerings.

The PSCA survey found that more than 75% of organizations provide NQDC-specific education. When asked why they provided the education, 65.7% of employers said they wanted to increase awareness of the plan, and 16.8% wanted to increase participation.

“The growing emphasis on education and financial wellness reflects a broader shift,” said Hansen in a statement. “Employers are not just offering NQDC plans—they’re making sure executives understand and fully leverage them.”