Difference between revisions of "Deferred compensation"

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(Forum thread discussion - a lot more info will be added. See first forum thread link.)
(Removed the lines below the definition, as they applied to non-qualified plans.)
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deferred compensation
 
deferred compensation
  
 
;An arrangement in which a portion of an employee's income is paid out at a date later than income is actually earned. Examples include pensions, retirement plans, and stock options. The primary benefit of most deferred compensation plans is the ''deferral of tax''.
 
;An arrangement in which a portion of an employee's income is paid out at a date later than income is actually earned. Examples include pensions, retirement plans, and stock options. The primary benefit of most deferred compensation plans is the ''deferral of tax''.
 
Similar to a 401(k), deferred compensation is a way for some or all employees of an organization to defer up to 100% of their income, earning a return on the dollars they would have paid in taxes.
 
 
An associated risk of deferred compensation plans is that once you have "deferred" your pay it becomes part of the assets of the corporation. If the company fails, your assets become at risk.
 
  
  

Revision as of 18:54, 11 September 2009

deferred compensation

An arrangement in which a portion of an employee's income is paid out at a date later than income is actually earned. Examples include pensions, retirement plans, and stock options. The primary benefit of most deferred compensation plans is the deferral of tax.


Links

Deferred compensation--what is it?, Bogleheads forum discussion
Deferred Compensation, Bogleheads forum discussion

Definitions of deferred compensation on Google