A non-qualified deferred compensation (NQDC) plan is any elective or nonelective plan, agreement, method, or arrangement between an employer and an employee to pay the employee compensation some time in the future. NQDC plans do not afford employers and employees with the tax benefits associated with qualified plans because, unlike qualified plans, NQDC plans do not satisfy all of the requirements of section 401(a).

Despite their many names, NQDC plans typically fall into four categories.

• Salary Reduction Arrangements simply defer the receipt of otherwise currently includible compensation by allowing the participant to defer receipt of a portion of his or her salary.
  
  
• Bonus Deferral Plans resemble salary reduction arrangements, except they enable participants to defer receipt of bonuses.
  
  
• Top-Hat Plans (aka Supplemental Executive Retirement Plans) are NQDC plans maintained primarily for a select group of management or highly compensated employees.
  
  
• Excess Benefit Plans are NQDC plans that provide benefits solely to employees whose benefits under the employer's qualified plan are limited by.