A nonqualified deferred compensation plan lets eligible employees defer a portion of their compensation, such as bonuses or incentive pay, to a future date. In the US, you don't pay federal or state income tax on that deferred portion in the year you defer it, so it has the potential to grow tax-deferred until you receive it. These plans are often used to provide long-term rewards for executives and key employees, helping companies support retention, financial planning, and wealth-building beyond standard retirement benefits.