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Originally Posted by kyuss275
What happens if the ducks go belly up before his deferred money kicks in?
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This really is a good question.
When corporations have deferred compensation plans in which all employees can participate, the plans are qualified, the assets placed in a trust and protected from creditors.
I don’t imagine these plans are qualified though because they are negotiated individually. The assets can still be placed in a rabbi trust which means the organization can not access them. But they are still subject to creditor claims in a bankruptcy.
It’s an issue with deferred compensation plans for executives. You get potential tax savings but you are taking on some credit risk.
This is in the US. May be different in Canada.