Deferred Compensation Plan: Best Way To Reduce Taxes

If you have struggled to reduce your taxes as a high income salaried employee, Deferred Compensation Plan can be the solution.

Types Of Deferred Compensation Plan

Generally speaking the 2 types of Deferred Compensation Plan are Qualified and Non-qualified Deferred Compensation Plan.

401(k) plans have defined contribution limits and are subject to protections under ERISA.

With Deferred Compensation Plan you pay taxes on both the growth and contribution when you receive the money.

Difference Between Roth IRA And Deferred Compensation Plan

The Deferred Compensation Plan is offered to a select group of management and highly compensated employees.

How does Deferred Compensation Plan work?

Every year you can defer a certain percentage of your salary. Your deferrals are taken on a before-tax basis, and will reduce your federal taxable income.

How does Deferred Compensation Plan Reduce Taxes?

The Plan provides eligible employees the opportunity to save on a before-tax basis.

Deferred Compensation Plan Elections

Your Compensation Deferral Election will not automatically continue in effect for each subsequent Plan Year.

If you fail to make a Compensation Deferral election within this initial 30 day enrollment period, you cannot elect to defer Compensation until the following Plan Year.

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