Retirement savings have taken a beating during the COVID-19 pandemic, just like they did during the 2008 crash. Workers everywhere, some furloughed, some laid off, and others still employed, have been forced to juggle current expenses with savings, and naturally, current expenses take priority. According to a survey from FinanceBuzz, taken in August, 27% of Americans had stopped or decreased retirement savings during the COVID-19 crisis.
One savings plan, similar in some ways to a 401(k) plan, may be able to help employees who are looking for ways to make up for lost savings after employees either stopped 401k contributions, lost employer-matching funds or cashed out retirement savings to cover immediate expenses.
It’s called a nonqualified deferred compensation (NQDC) plan, and it has a growing number of backers in the corporate world.
The plan, which allows certain execs and specialists to shield additional retirement funds from taxation outside of limited 401k accounts, is an important consideration for companies looking to go after—or keep—top talent. Helping employees manage their financial health is a growing concern for employers as they grapple with the complexities of employee engagement and growth within their organizations.