What is the term for an agreement between an employer and an employee for future compensation?

The term for an agreement between an employer and an employee regarding future compensation is "Nonqualified deferred compensation" (NQDC). This type of agreement allows employees to defer a portion of their earnings to be paid out at a later date, often at retirement. NQDC plans are not bound by the same regulations as qualified plans, such as 401(k)s, meaning they have more flexibility in terms of the amount that can be deferred and the timing of payments.

Employees may choose to participate in these plans for various reasons, including tax benefits since the income is not taxed until it is received. Additionally, NQDC plans can be tailored to the needs of employees, providing them with potentially larger sums when they retire, as they can accumulate over time without immediate tax implications.

In contrast, the other options refer to different kinds of compensation and benefits. For example, qualified deferred compensation generally involves employer-sponsored retirement plans that meet IRS guidelines and offer certain tax advantages to both employers and employees. Retirement savings plans and employee benefit plans encompass a wider array of programs aimed at providing financial security and support to employees but do not specifically describe agreements for future compensation in the way NQDC does.