You Have $1.4M in Deferred Comp: Here's When to Take It

If you have a large balance in a non-qualified deferred compensation plan, the distribution decision you made at open enrollment years ago could cost you $200,000 or more in taxes. Most executives made that election without a financial planner in the room, before they knew what their retirement income picture would actually look like, and under Section 409A, changing it is not straightforward. In this video, I walk through exactly how the math works, what a locked-in lump sum election actually costs versus a 10-year installment, and what moves are still available to you depending on where you are in your timeline. We cover: The three NQDC distribution decisions and how each one compounds the others Why a lump sum election on $1.4M can trigger a $560,000 tax bill in a single year The 409A change election window and when it closes permanently A full case study: David and Caroline, and what switching to installments saves them Three bracket traps that cost six figures even when executives elect installments Four moves you can still make if your election is already locked in Timestamps: (00:00) The $1.4M problem (01:25) The three distribution decisions (02:25) Misconception 1: The lump sum default (03:20) Lump sum vs. 10-year installments: the math (04:15) Misconception 2: The 409A lock (06:10) Case study: David and Caroline (07:45) IRMAA surcharges and the lost Roth window (08:35) The 10-year installment scenario (10:15) The lifetime tax difference (10:30) Three bracket traps (13:25) What to do if you're already locked in I'm Bjorn Amundson, a CERTIFIED FINANCIAL PLANNER professional at Quarry Hill Advisors. Our practice specializes in working with executives and high-income professionals on complex financial decisions, including deferred compensation planning, tax sequencing, and retirement income strategy. If you want to understand how your current NQDC elections fit into your overall retirement picture, copy the link below to schedule a complimentary Retirement Readiness Review. https://quarryhilladvisors.com/retire... #deferredcompensation #nqdc #executivecompensation #retirementplanning #taxplanning #409A #financialplanning