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Deferred compensation is a benefit primarily available to corporate executives. Michelle Smallenberger from Financial Design Studio discusses its essential aspects. First, she defines deferred compensation as income earned currently but paid out at a future date. The main reasons executives utilize this benefit include tax savings, as deferring income can reduce tax liability by shifting it to a time when they may be in a lower tax bracket. Additionally, the video addresses key timings and decisions regarding taxes and the implications of deferred compensation on financial planning, including examining its pros and cons.