What is Deferred Compensation ?
Deferred compensation refers to a portion of an employee’s income that is set aside to be paid at a later date, typically after retirement or upon meeting certain conditions. It is a financial arrangement often used as part of retirement plans or executive compensation.
Types of Deferred Compensation:
Qualified Plans: Tax-advantaged, regulated plans like 401(k)s.
Non-Qualified Plans: More flexible, often offered to executives, but less regulated.
Benefits:
Allows tax deferral.
Supports long-term financial planning.
Enhances employee retention.