Mariner Wealth Advisors on Deferred Compensation Planning for Executives

Which decisions does deferred compensation planning actually involve?

Deferred compensation planning covers four decisions: how much you defer each year, when each year's balance pays out, in what form, and how those payments fit the rest of your retirement income. Many executives assume they can pick the payout form when they retire. In fact, the form was usually fixed when each year's deferral was elected.

Take Hypothetical: Victor, 58, an SVP of operations at a consumer-goods company who plans to retire in three years. His wife Jeanette, 60, is a retired school principal with a pension. Victor's lump sum at 61 is already on file unless he changes it in time.

The taxes work in two layers. Payments are ordinary income when paid if the plan complies with 409A. Social Security and Medicare tax, though, generally applied when the pay was earned or vested. A payout year can therefore look smaller on the pay stub than the income tax bill turns out to be.

Because Victor was born after 1960, his required minimum distributions from IRAs and 401(k)s don't start until age 75. That overlaps the final installment year of a ten-year schedule ending at 75, so we check both in the same projection.

Who needs this most? An executive within about five years of leaving, with a balance large enough that a single payout year changes the tax bracket. We cover bonus deferral elections, and how to weigh one payment against installments, on separate pages.

• The yearly deferral amount, elected before the year the pay is earned.
• The payout trigger and form for each class year.
• Your investment choices within the plan's menu.
• How payout years fit with a spouse's pension, Social Security claiming and required minimum distributions.

What deferred compensation planning cannot change

A nonqualified balance can't be rolled into an IRA. It's paid under the plan's terms, and 409A generally bars speeding payments up, apart from narrow exceptions.

The balance is also an unsecured general obligation of the employer, which is a risk we cover on the bankruptcy-risk page.

Once separation is less than 12 months away, a new election generally can't take effect in time, so the election on file stands. Some plans don't allow re-elections at all, or treat installments in their own way. Only the plan document settles this.

Mariner Wealth Advisors doesn't forecast future tax rates. It plans with the rules in force today and reruns the projection when the law or your plans change. Guesses about tax law are as unreliable as market forecasts, and we'd rather not build a retirement on either.

Where do executives go wrong with deferral elections?

The costliest error is leaving a large lump sum to pay out in a single year. Say Victor's $1.8 million arrives at 61 alongside Jeanette's $60,000 pension. Taxable income is $1,860,000 less the $32,200 joint standard deduction, or about $1,827,800. That puts $1,059,100 above the 37% threshold of $768,700 for joint filers (tax year 2026).

Second, stacking class years. Electing the same trigger every year means several balances pay out together, often without anyone planning for it.

Third, ignoring Medicare. IRMAA looks back two years: income Victor receives at 63 sets his premiums at 65. For 2026, joint income above $218,000 raises the Medicare Part B premium from $202.90 to at least $284.10 a month per person.

Fourth, holding the plan's balance in a company stock fund on top of vested shares and unvested awards. That doubles your exposure to one employer. Investing involves risk, including loss of principal, and a single issuer concentrates it.

One more check, in general form: if your installments run ten years or longer, federal law generally keeps the state you moved away from from taxing them. Look up the rules that apply to you.

How Mariner Wealth Advisors works through your plan, step by step

You receive a written payout timeline with the gap years and their funding source marked. We reissue it whenever an election or retirement date changes.

Here is the math for Victor. He has $1.8 million and a lump sum on file, payable at 61. He'd prefer ten installments. Under Section 409A, the change takes effect only 12 months after he files it and must push the first payment back at least five years, from 61 to 66. Ignoring growth, $1,800,000 ÷ 10 = $180,000 a year, ages 66 through 75. That leaves five years, 61 through 65, with no plan payments. At $150,000 of yearly spending, minus Jeanette's $60,000 pension, the gap is $90,000 × 5 = $450,000 from other savings. Five installments would also start at 66, at $360,000 a year through 70.

Notice in the table that the last row gets Victor nothing new: a change filed under 12 months before leaving leaves the lump sum in place.

The rule we apply: if your plan allows re-elections and you might want a different payout form, file the change at least 12 months before the earliest date you could leave. Before you file, work out how you'll pay for the gap, since the first payment moves back five years or more.

The limit is real. Planning only works within what the plan document permits. If it bars re-elections, or you'll leave within 12 months, the election on file mostly stands. Installments also mean funding the gap from other savings and keeping your money exposed to the employer's credit for longer.

• Step 1: collect the plan document, every class-year election form, current balances by year and the investment menu.
• Step 2: draw up a timeline showing each balance's trigger, form, first payment and last payment.
• Step 3: build a year-by-year income projection from 61 to 75 covering plan payments, pension, Social Security claiming age, RMDs from 75 and the IRMAA tiers two years later.
• Step 4: list which re-elections the plan allows and the last date each can be made under the 12-month rule.
• Step 5: you sign and file any new election with the plan administrator, and Mariner Wealth Advisors checks the administrator's confirmation against the timeline.
• Step 6: compare the plan's investments with your other holdings to find overlap with company stock.

How do I start deferred compensation planning with Mariner Wealth Advisors?

To begin, fill out the request form here on the site; the firm doesn't list a phone number. Meetings take place by video or phone. Mariner Wealth Advisors asks for $500K or more in investable assets, and you get a written explanation of fees before any engagement.

Bring your planned separation date. If it's more than 12 months away, re-elections may still be open, and the first meeting puts that deadline on the calendar.

Mariner Wealth Advisors serves 590,000 clients and $9.8 billion in client assets as of 10/5/2026.

• The plan document or summary.
• Each year's election confirmations.
• Your latest account statement.
• The pension estimate, if there is one, and your Social Security statement.