Restore point in the Deferred Compensation Plan effortlessly

Aug 6th, 2022
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How to Restore point in the Deferred Compensation Plan

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and hello and welcome to beacon points fiduciary point of view webinar series just as a quick introduction this is doug eagle the director of retirement plan services at beacon point advisors beacon point is a registered investment advisory firm located in newport beach california we currently manage over 9.5 billion dollars in total assets well be hosting a new fiduciary point of view webinar every four to six weeks on various topics pertaining to the defined contribution industry both in the world 401k space as well as the not-for-profit 403 b space our goal is to bring to light various topics for both our clients as well as the general plan sponsor community and were trying to bring in experts in respective fields to educate and help inform all those in attendance well we just passed the testing deadline of march 15th and were fast approaching the individual tax filing date of mid-april and with these two deadlines were generating a lot of questions from our plan sponsored clie

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The Plan is an unfunded deferred compensation arrangement for a select group of management or highly compensated employees.
The journal entry is simple. Debit Deferred Compensation Liability for $100,000 (this will zero out the account balance), and credit Cash for $100,000. Taxes on the payment will be paid at this point (by both the corporation and the employee).
415(m) Plan benefits are: Taxed as ordinary income, reported to you on IRS Form W-2. Not subject to Social Security and Medicare (FICA) taxes. Not eligible for rollovers.
A restoration plan is designed to restore benefits or contributions that are cut back or limited under a tax-qualified retirement plan due to Internal Revenue Code limits. Restoration plans are common and generally do not result in negative attention from shareholders.
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.
Approval for an unforeseeable emergency withdrawal is not automatic. If approved, you can receive up to the full amount of your 457 account balance. There is no tax penalty for this early withdrawal and the entire withdrawal is taxed as ordinary income.
401(k) Restoration Deferral means a deferral of Base Salary and/or Bonus Payments that cannot be deferred under the United 401(k) Plan and, thus, are ineligible for the matching contribution under the United 401(k) Plan.
There are two general types of NQDC plans: top-hat plans and deferred savings plans. Top-hat plans are generally paid by employers, while deferred savings plans are based on the amount of compensation deferred by each employee.

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