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 ?
3121(v)(2) provides that amounts deferred under a nonqualified deferred compensation plan are includible in the employee's Social Security and Medicare Tax wage base as of the later of 1) when the services are performed; or 2) when there is no substantial risk of forfeiture of the right to the deferred amounts.
Because a participant in a nonqualified deferred compensation plan subject to Sec.
Code section 409A imposes additional rules to avoid current constructive receipt on a nonqualified deferred compensation plan at inception and during the life of a covered plan:
In contrast, by making the key decisions and taking the appropriate steps in a timely fashion, Success Corp can have a deferred compensation plan that continues to meet its needs; and the firm's participants can be happy with a plan that helps to reward and retain them.
Under section 409A, a nonqualified deferred compensation plan is broadly defined as any plan that provides for the deferral of compensation, except for (1) qualified employer plans (such as section 401(k) plans, pension plans and tax-deferred annuities), and (2) bona fide vacation leave, sick leave, compensatory time, disability pay, or death benefit plans.
There has been some concern that a deferred compensation plan which covers only the majority or controlling shareholder/employee in a closely-held corporation might give rise to a constructive dividend, probably in an amount equal to the premium payments for any life insurance policy used as an additional funding vehicle.
Adopting a non-qualified deferred compensation plan would require a comprehensive analysis of many factors (including some omitted from this article due to space limitations).
A brochure VALIC is using to market the deferred compensation plan includes this caveat: "Neither VALIC nor any of its agents give legal or tax advice.
In addition to these adverse tax consequences, the establishment of a funded deferred compensation plan would defeat the plan's reliance on ERISA's top-hat exemption.
This is due to last year's third quarter results being positively impacted by USD299,000 after tax gains on the sale of securities, a USD903,000 tax-free benefit from a bank-owned life insurance policy and a USD498,000 tax-free gain realised through the company's deferred compensation plan trust.
Since a deferred compensation plan is simply a "substitute" for, or supplement to, current compensation, it is possible to obtain a better balance between present earnings and future retirement income.
457 deferred compensation plan proceeds to purchase service credits with those proceeds.