Tax Planning for High Earners Goes Beyond the 401(k)

High earners can defer unlimited pre-tax income via 409A plans, but those assets remain exposed to employer creditors and bankruptcy.

• Deferred comp beyond 401(k): Non-qualified 409A deferred-comp plans let the top ~18% of earners (not just titled executives) defer unlimited pre-tax income, unlike ERISA-capped 401(k)s.
• Creditor risk is the trade-off: Deferred comp assets sit as company assets in a rabbi trust, exposed to employer bankruptcy and creditors — Colin Steinberg says this has occurred, though rarely.

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