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 is being earned but not received, a process that defers the taxes on the compensation until it is actually received at a later date. Deferred compensation includes various plans, some being pensions, profit-sharing, and stock options.

deferred compensation

payment schemes that pay lower wages during the early years of employment in an organization and higher wages in subsequent years. With deferred compensation schemes, a worker's remuneration increases with seniority and experience, which tend to improve the worker's efficiency within the organization. Such compensation schemes tend to reduce labour turnover and reduce SHIRKING. See PAY.

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.
References in periodicals archive ?
Tenders are invited for Investment Consultant Services 401(A) Defined Contribution And 457 Deferred Compensation Plans
Although the IRS historically used the term "deferred compensation" to describe all types of arrangements that defer earnings, compensation, or income out into the future, there are only two major categories of deferred compensation, after the enactment of Code section 409A: nonqualified deferred compensation plans and qualified deferred compensation plans, which are specifically exempted from section 409A coverage.
Non-qualified deferred compensation plans are retirement plans that supplement qualified plans, such as pension plans or 401 (k) plans.
Code section 409A has tightened up the deferral and distribution rules that apply to nonqualified deferred compensation plans.
The new law affects almost all forms of deferred compensation plans and arrangements that are not "qualified" for special tax treatment under the code.
Section 409A regulates the taxability of executives' non-qualified deferred compensation plans.
Recently, the IRS issued final regulations to provide guidance on rules for nonqualified deferred compensation plans under Internal Revenue Code Sec.
2004-60, that interests in nonqualified stock options (NQSOs) or deferred compensation plans transferred as part of a divorce are subject to tax, withholding and reporting requirements when exercised, rather than when the transfer occurs.
What types of deferred compensation plans are subject to Section 409A?
The American Jobs Creation Act of 2004 included Section 409A, which changed the rules governing non-qualified deferred compensation plans.
If you have clients who offer deferred compensation plans to their employees, then you probably have clients who are affected by Sec.
In addition, the panelists discussed major changes in the way companies need to handle their non-qualified deferred compensation plans as required by last year's American Jobs Creation Act.