Imagine that a client – a 42-year-old manager of a privately held company – calls you, concerned and seeking advice. He says: "I've been offered an opportunity to participate in my company's non-qualified deferred compensation (NQDC) plan. It's quite an honor."

You ask why he is concerned.

He says: "Participating in NQDC gives me the opportunity to defer salary and bonuses rather than taking taxable cash. But my tax bracket isn't very high yet, and I could use more liquidity, especially since my children are moving toward college age. Mainly, I'm concerned how safe y money will be in the plan. I can't access my NQDC money until I leave the company, die or retire. Although the plan is funded with corporate-owned life insurance (COLI), the policy belongs to the company, not me. I would be a general unsecured creditor of my employer. If the company becomes insolvent, I'm worried what would happen to my money."