is deferred compensation deductible for tax
(Contributions to Roth 401(k) accounts aren t tax-deferred for the employee.) The disadvantages are there are limitations on the amount of the contributions and the plans must be nondiscriminatory. Since most employees must participate, qualified plans are expensive for businesses with many employees. Another alternative is nonqualified deferred compensation. Benefits from nonqualified deferred compensation plans aren t tax deductible for the employer until they are paid to the employee (or successor). The earnings on amounts set aside for these plans is taxable to the employer until the benefits are paid. These plans can be discriminatory.