Nonqualified Retirement Plans
Chapters in this video
- 0:00 The qualified vs nonqualified tradeoff and Carl's bankruptcy yard sale
- 1:04 Pause check: Carl's deferred compensation in bankruptcy
- 2:28 Governmental vs non-governmental 457(b) plans and creditor protection
- 3:04 457(b) contribution limits and the double deferral superpower
- 4:03 The no-penalty withdrawal rule and rollover contamination
- 5:00 Executive bonus plans and life insurance ownership
- 5:52 The timing exception: immediate deduction vs current taxation
- 6:44 Constructive receipt doctrine and economic benefit doctrine
- 7:55 Rapid-fire exam recap
What this video covers
- Why nonqualified plan benefits are generally unsecured promises exposed to employer creditors, and what happens to participants if the employer goes bankrupt
- How governmental 457(b) plans differ from non-governmental 457(b) plans, specifically which assets must be held in trust and protected from creditors
- Why 457(b) plans have no 10% early withdrawal penalty on regular deferrals, and the rollover contamination trap that preserves penalty exposure on rolled-in funds
- How 457(b) deferral limits are completely independent from 401(k)/403(b) limits, allowing eligible employees to effectively double their tax-deferred savings
- What an executive bonus plan is, how it uses life insurance, and why it requires no Internal Revenue Service (IRS) approval or Employee Retirement Income Security Act (ERISA) plan documents
- Why executive bonus plans are the timing exception: immediate employer deduction and currently taxable income to the employee on her W-2
- How the constructive receipt doctrine and economic benefit doctrine determine when deferred compensation becomes taxable
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