Can my S-Corp defer my compensation as a liability to avoid pass-through taxation?

So I have a single owner S-Corp where I am the only employee. I understand that as a pass-through entity all profits flow to my personal return whether I take the cash out or not — meaning I get taxed on money I never touched.

I came across the idea of using a nonqualified deferred compensation plan to get around this and wanted to see if my understanding of the mechanics is correct before bringing it to my CPA.

Here is how I think it works. Before January 1st my company adopts a formal written NQDC plan under IRC §409A and I sign an election to defer a portion of my compensation to a specific future date — say 10 years from now. When the company earns revenue that year instead of the deferred portion being recorded as profit — which would pass through to my personal return and get taxed immediately — my CPA books it as a liability on the balance sheet. A formal debt the company owes me. Since liabilities are not profit they never pass through to my personal return and I pay zero tax on that amount this year.

To fund and protect that liability the company then purchases an annuity in the same amount. The company owns the annuity entirely and I have no direct access to it. Every year the annuity grows and every year the liability on the books grows to match. Because neither a growing annuity nor a growing liability is taxable income — nothing passes through to me personally during that entire period.

Then on the specific future date I elected the company surrenders the annuity and pays me the full amount. That is the first moment the IRS can touch it. I recognize it as ordinary income that year and pay tax on it then — ideally in a year when I am earning less and sitting in a lower tax bracket — and I can spread the payments over multiple years to stay in that lower bracket deliberately.

So essentially the NQDC plan converts what would have been pass-through profit into a corporate liability — and since liabilities are not income they never trigger the pass-through rule in the first place.

Is this mechanically correct? Any S-Corp specific pitfalls with this approach versus doing it in a C-Corp?