Negate image in the Deferred Compensation Plan effortlessly

Aug 6th, 2022
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How to Negate image in the Deferred Compensation Plan

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Randy from Texas writes in about deferred compensation programs and questions regarding them before o.9 is in particularly and heres his question hey Josh love the channel just turning 55 and have a pretty high salary with a bonus happy 409a deferred compensation plan with employment separation it pays out a lump sum or over a five to ten year payout currently have a pretty docHub amount of money in this deferred account can you do a video or have you done one on 401 a in a retirement strategy a 498a retirement strategy absolutely Randy yeah yeah Randy this is a challenge deferred compensation is a challenge so lets talk about how these work first and foremost so these are non-qualified deferred comp plans as I cant make this bigger Im telling you a lot of people think its is to cast me out Im just telling Im not saying its not if your company offers it in lieu of taking income when youre making good money that might be beneficial but Im telling us be careful so a not a

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The biggest is that any contributions the company makes to a plan arent deductible until the employee receives the compensation. That may affect some tax planning for companies. The plans carry some inherent risk for the employees in that the deferred payments are unsecured and not guaranteed.
NQDC plans allow corporate executives to defer a much larger portion of their compensation, and to defer taxes on the money until the deferral is paid. You should consider contributing to a corporate NQDC plan only if you are maxing out your qualified plan options, such as a 401(k).
An example would be 401(k) plans. Nonqualified deferred compensation plans let your employees put a portion of their pay into a permanent trust, where it grows tax deferred. With this plan, your business promises to pay an employee at a future date.
A nonqualified deferred compensation plan is a type of retirement plan that lets select, highly compensated employees enjoy tax advantages by deferring a greater percentage of their compensation (and current income taxes) than is allowed by the IRS in a qualified retirement plan.
A nonqualified deferred compensation plan is a type of retirement plan that lets select, highly compensated employees enjoy tax advantages by deferring a greater percentage of their compensation (and current income taxes) than is allowed by the IRS in a qualified retirement plan.
Examples of nonqualified plans are deferred compensation plans, supplemental executive retirement plans, split-dollar arrangements and other similar arrangements. Contributions to a deferred compensation plan will reduce an employees gross income, but theres no rollover option upon termination of employment.
A 401(k) plan is a qualified deferred compensation plan. If youre eligible under the plan, you generally can elect to have your employer contribute a portion of your compensation to the plan on a pretax basis.

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