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Deferred Compensation |
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Deferred compensation An amount that has been earned but is not actually paid until a later date, typically through a payment plan, pension, or stock option plan. Deferred Compensation Money or other compensation that has been earned but not yet received by the earner. Deferred compensation is not taxed until it is actually received, and is usually taxed at a lower rate when it is received (depending on one's income later in life). The most common form of deferred compensation is a retirement plan such as an IRA or 401(k), but stock options and other pensions also qualify.
Deferred Compensation Compensation that will be taxed when received or upon the removal of certain restrictions on receipt and not when earned. For example, contributions by an employer to a qualified pension or profit-sharing plan on behalf of an employee are considered deferred compensation. Such contributions will not be taxed to the employee until the funds are made available or distributed to the employee, usually upon retirement or separation from service. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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