Deferred Compensation Plan: Best Way To Reduce Taxes

[{"selector":"#anim-077fcc4a-4dfb-43b6-be78-ed1dae0b320d","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-710dd8a4-8cbb-4f95-a9b3-81b8a00362ed","keyframes":{"transform":["translate3d(0px, -169.10777%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Learn more

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

[{"selector":"#anim-6b063f98-d6bc-4cfb-8d2b-e12157cacdee","keyframes":{"opacity":[0,1]},"delay":250,"duration":1400,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-ceb85fa0-5c80-400d-b895-23ba152efc7c","keyframes":{"transform":["translate3d(0px, 194.00086%, 0)","translate3d(0px, 0px, 0)"]},"delay":250,"duration":1400,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-d21dbdac-9014-4707-88bd-8397d19ab74c","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-2f78720e-7af8-47ed-bbd3-0cf332b39bc1","keyframes":{"transform":["translate3d(0px, 97.37474%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-a155179c-981d-4390-b7dc-86c16ab68f1d","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-e4bc3bec-6c11-4274-a571-be598491d4a5","keyframes":{"transform":["translate3d(-98.81517%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Learn more

Deferred Compensation plan is especially suited for the Financially Independent Retire Early (FIRE) crowd. But, there are certain aspects one needs to consider.

[{"selector":"#anim-9f047202-060f-4d6c-ae12-4c145a0e9ba3","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-82e6a709-eff8-41b7-b3d8-251a5beeaf5f","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Gray Frame Corner Gray Frame Corner Gray Frame Corner Gray Frame Corner Learn more

A Qualified Deferred Compensation Plans complies with Employee Retirement Income Security Act (ERISA) and include 401(k) and 403(b) plans. These plans are well known and will not be covered in the article.

[{"selector":"#anim-85cb9e1d-f931-470e-addc-941d7c959c8b","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-7be4f672-0ece-4d52-8a5e-417682710779","keyframes":{"transform":["translate3d(0px, 209.22839%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-51768c0b-ab03-4581-9ee0-f5916c03b648","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-7158d6de-d09c-4289-abd5-17a6cbd710c2","keyframes":{"transform":["translate3d(-125.18518%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8f1aefaa-5b4a-4c20-a4ec-b5f28df6a95a","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-b5c3da7f-1bcf-49a7-a31b-8c1007f52dec","keyframes":{"transform":["translate3d(-121.98581%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Generally speaking the 2 types of Deferred Compensation Plan are Qualified and Non-qualified Deferred Compensation Plan. Learn more

Difference Between 401(k) And Deferred Compensation Plan

[{"selector":"#anim-60270578-cd67-4ad3-9c50-48601b4595a7","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-79db0cd3-57c9-48f8-b92d-7e1ef2dfeba6","keyframes":{"transform":["translate3d(0px, 243.20990%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-6983e564-077e-43f9-a781-f7958504d012","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-071efc46-2ce0-4c1f-a056-173ffbf7cabe","keyframes":{"transform":["translate3d(-130.31496%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Learn more

You can choose to enroll in both the 401(k) and Deferred Compensation Plan. In fact, the general recommendation is to maximize the 401(k). And use the Deferred Compensation Plan when you want to shelter income more than that permitted by 401(k) limits.

[{"selector":"#anim-43006364-ec6d-47d0-a914-ba79258879bd","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-22b44e4e-034d-41e4-9e41-dada9b258edb","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Gray Frame Corner Gray Frame Corner Gray Frame Corner Gray Frame Corner Learn more

Difference Between Roth IRA And Deferred Compensation Plan

[{"selector":"#anim-62821816-1ce1-4e66-a08f-5b3879324c23","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-9fb65eca-88bb-4d24-82d1-1bf7bfa3587c","keyframes":{"transform":["translate3d(0px, 404.46864%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-6e8dd963-5a49-43a4-8ab4-0ebdb00a7dfe","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-da62c2f8-e5e8-4cee-b22e-dc1587536390","keyframes":{"transform":["translate3d(-132.03125%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-62792cb2-34d0-4bd4-9988-e74068f301a6","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8a5a4aac-f97d-4df8-a6d6-97b92f1eae0b","keyframes":{"transform":["translate3d(0px, 76.75121%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Learn more

What is A Deferred Compensation Plan?

[{"selector":"#anim-3b1e2fc8-616a-4b52-93c8-c242382e8fc0","keyframes":{"opacity":[0,1]},"delay":250,"duration":1400,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-563f09f8-9478-4393-913c-f92d27501ab3","keyframes":{"transform":["translate3d(0px, 824.96374%, 0)","translate3d(0px, 0px, 0)"]},"delay":250,"duration":1400,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-3ae08316-c83d-439f-a263-2059d9f0f4d0","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-4a9782e5-faee-4658-864e-8cb44914c74e","keyframes":{"transform":["translate3d(0px, 85.56110%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-a11c5374-d1f5-45d5-8901-1e5c12c147d6","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-080fd348-d57f-49ca-99b7-cfe17ffdf741","keyframes":{"transform":["translate3d(-97.63034%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-f66faef7-93e7-4801-9a33-9dbcea308f3c","keyframes":{"opacity":[0,1]},"delay":250,"duration":1400,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-64ce23f8-8791-42a1-a259-f014fae400e7","keyframes":{"transform":["translate3d(0px, 163.34087%, 0)","translate3d(0px, 0px, 0)"]},"delay":250,"duration":1400,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Learn more

Swipe Up for more about Deferred Compensation Plan: Best Way To Reduce Taxes

[{"selector":"#anim-caa5ba85-2031-42f3-b64b-1f33b4e22f4f","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-d1cf274e-3d74-433d-b664-a0aa82c480ff","keyframes":{"transform":["translate3d(259.40593%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-4cb85a09-640f-4f96-ae8a-764eed024483","keyframes":{"opacity":[0,1]},"delay":200,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-c2545d18-3694-421c-a075-c29d9b3ab793","keyframes":{"transform":["translate3d(151.50000%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":200,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-21ed3f3c-f470-4a34-a4ad-74e162d6ad25","keyframes":{"opacity":[0,1]},"delay":300,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-2358d629-98ed-4a17-a168-dc7062d64e1e","keyframes":{"transform":["translate3d(42.07921%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":300,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-d9d01bba-0dff-4fa6-ba51-a0bd258e0da0","keyframes":{"opacity":[0,1]},"delay":300,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-35637b4e-5d47-4944-bf2b-23c537f00c62","keyframes":{"transform":["translate3d(-260.89109%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":300,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-b180fbf3-c3ae-453f-830d-7a8eb67c66aa","keyframes":{"opacity":[0,1]},"delay":400,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-66973ae8-ba2c-4f9d-bdbf-623e35ba100d","keyframes":{"transform":["translate3d(-154.5%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":400,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-5fa402af-42c9-4bc0-8dc8-8e44fa7ebb35","keyframes":{"opacity":[0,1]},"delay":500,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-83a25357-b5d4-463d-8a22-013f2d460f25","keyframes":{"transform":["translate3d(-44.55445%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":500,"duration":2000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-361d6a9f-7780-4826-9d6c-464a6888496d","keyframes":{"opacity":[0,1]},"delay":600,"duration":1600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-5caf2ef8-3c00-405a-bfef-e8a2c8444baf","keyframes":{"opacity":[0,1]},"delay":600,"duration":1600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] Accountability Partner And How To Pick One Why Residential Rental Property Investment Is No Longer A Good Idea

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.

Deferred Compensation plan is especially suited for the Financially Independent Retire Early (FIRE) crowd. But, there are certain aspects one needs to consider.

A Qualified Deferred Compensation Plans complies with Employee Retirement Income Security Act (ERISA) and include 401(k) and 403(b) plans. These plans are well known and will not be covered in the article.

Types Of Deferred Compensation Plan

Difference Between 401(k) And Deferred Compensation Plan

Deferred Compensation Plans do not have limits specified by the government. The downside is that ERISA protections are no longer available.

You can choose to enroll in both the 401(k) and Deferred Compensation Plan. In fact, the general recommendation is to maximize the 401(k). And use the Deferred Compensation Plan when you want to shelter income more than that permitted by 401(k) limits.

Difference Between Roth IRA And Deferred Compensation Plan

Roth IRA and Deferred Compensation Plan both grow tax free. However, with Roth IRA, you pay taxes now on your contribution. With Deferred Compensation Plan you pay taxes on both the growth and contribution when you receive the money.

What is A Deferred Compensation Plan?

The Deferred Compensation Plan is offered to a select group of management and highly compensated employees. The Plan allows you to save for the future on a before-tax basis.

Swipe Up for more about Deferred Compensation Plan: Best Way To Reduce Taxes

Swipe Up for more about Deferred Compensation Plan: Best Way To Reduce Taxes

Read more