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Non qualified savings plan, NQSP / DCSP -- are they worth it?

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  • Non qualified savings plan, NQSP / DCSP -- are they worth it?

    I am a fellow, my wife is a high income earner in non-medical field. She is not eligible for her company 401k due being an executive and earning in the top 5% of her company.

    She is however eligible for her company's non qualified savings plan with a 50% match up to first $6,000 and max of $50,000 / year. Terms for distribution are when she leaves the company in lump sum, 3y, 5y. or 10y. She has no plans to leave (27 years old) and the company is one of the most stable in the industry. There are nice offerings like VG total stock market index, VG target date funds, etc.

    We max Roth IRA backdoor, HSA/FSA, I max my 403b. We have various rental properties. We have a "small" taxable investment account. We are trying to save 30% of our gross income with 15% markets and 15% REI.

    In your opinion is the NQSP worth doing just to get the match? Would you max it and not take distribution until retirement from the company? Would you make this bond heavy and rebalance other accounts for no bonds so that it's stable should it be a down market when she leaves the company? I am not too familiar with these, that's why I ask.

  • #2
    Given this fact pattern (highly stable employer, dual high earners), why wouldn’t she do it? I would contribute $25k to $50k/yr if I had the opportunity and plan for a 10-yr payout, hopefully when you are both ready to retire. Access to this plan would be a great resource of gap income for RE…and I definitely can see FI in your future if you continue that savings rate. No comment on the bonds.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      I would and did take every savings vehicle available. Invested just like any other investment.
      In corporate life, she will likely be gone before bankruptcy or retirement. From your description, savings counts more.