FINRA SIE Question Answer
Which of the following statements concerning nonqualified deferred compensation plans is true?
They are governed by ERISA rules.
Such plans must be reviewed with the IRS.
The deferred compensation must be held in escrow at a bank.
A failure of the business could lead to nonpayment of the deferred compensation.
Nonqualified deferred compensation (NQDC) plans allow employees to defer income until a future date.
D is correct because NQDC funds remain part of the company’s general assets, which creditors may claim if the company goes bankrupt.
A is incorrect as NQDC plans are not subject to ERISA rules.
B is incorrect because these plans do not require IRS review.
C is incorrect as NQDC assets are not required to be held in escrow.
TESTED 02 Jan 2026
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