Are deferred compensation plans creditor proof?

The short answer is yes. You can defer a significant portion of your compensation under a non-qualified retirement or deferred compensation plan. Deferred compensation plans are safe from your own creditors, but not the claims of your employer’s creditors. So consider this before you invest in a deferred compensation plan. There are, however, methods for an employer to lawsuit-proof a deferred compensation plan. For instance, the employer can hold the deferred compensation funds in an international ‘rabbi’ trust. This trust would then invest in one or more ‘charging order only entities,’ such as an international LLC to insulate the funds from the employer’s creditors.