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 ?
Pen-Cal has over 50 years of experience designing and administering innovative deferred compensation plans, with a focus on engaging employees and delivering flexible solutions.
When deferred compensation plans are used by closely held corporations and are maintained for a long time, resulting in large accumulations of capital by the corporation to fund the plan, it is possible the IRS may try to impose the accumulated earnings tax.
The Internal Revenue Service has announced the 2018 limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans, including deferred compensation plans that may be subject to Internal Revenue Code 409A.
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.
According to the research, the vast majority of plan sponsors (91%) say nonqualified deferred compensation plans are important to provide a competitive package for recruiting employees, a seven percentage point increase from 2011.
Given this broad description, nonqualified deferred compensation plans subject to 409A can include any of a variety of arrangements, including salary deferral arrangements, severance agreements, nonqualified stock option agreements or plans providing stock appreciation rights.
Non-qualified deferred compensation plans are retirement plans that supplement qualified plans, such as pension plans or 401 (k) plans.
Deferred compensation plans that don't consider the present value of money also concern me.
(2) There are two types of deferred compensation plans: "pure" deferred compensation plans and salary continuation plans.
Section 457 plans are nonqualified deferred compensation plans available to employees of state and local governments and tax-exempt organizations.
Nonqualified deferred compensation plans must now comply with a vast set of new rules.
The new law affects almost all forms of deferred compensation plans and arrangements that are not "qualified" for special tax treatment under the code.