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A lot of plaintiff attorneys are interested in deferring their contingent legal fees to future tax years. That does a couple of things. That reduces your current year income taxes, and it allows your fees to grow on a tax-deferred basis. So, youre using Uncle Sams portion, essentially, that you otherwise would have paid in taxes, just like in an IRA or a 401k, to grow tax-deferred until you start to receive those future payments. So, youve likely heard of an annuity-based plan or a deferred compensation plan. In a deferred compensation plan, you can take the funds, invest in a deferred compensation plan on a pre-tax basis, and those funds then grow tax-deferred, until you elect to start receiving them in the future. So, a question we often get is, Okay, well its more flexible than the annuity. So, how do those distributions work in the future? So essentially, you have 20 quarterly payments that are due you. So, you set up a plan, it continues to defer. Then, you need to give one
