deferred compensation


Also found in: Wikipedia.

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 ?
Prior to section 409A, many NQDC plans allowed participants to alter the form or tinting of distributions as long as the changes occurred before the deferred compensation payments began.
Interagency Advisory on Accounting for Deferred Compensation Agreements and Bank-Owned Life Insurance.
The American Jobs Creation Act of 2004 (AJCA) contains a set of provisions--new section 409A of the Internal Revenue Code (1)--designed to clamp down on perceived shortcomings and abuses surrounding the taxation of nonqualified deferred compensation arrangements for corporate executives and other individuals.
The American Jobs Creation Act of 2004 contains provisions that drastically change the design and operation of all nonqualified deferred compensation plans and will have an immediate, material and potentially adverse impact.
Over the past two years, Congress has been considering legislation that would require significant changes in the design and operation of nonqualified deferred compensation arrangements.
But did you know that deferred compensation is a tool used more and more frequently these days?
A 457(b) deferred compensation plan may be just the ticket for a more comfortable retirement.
Prior to the passage of tax reform in 2001, most managers at nonprofit telephone cooperatives had a hard time taking advantage of the deferred compensation rules, which allowed them to set aside a little extra money for retirement.
The survey found that financial officers' average total compensation (which includes base salary, bonus and deferred compensation) for 2001 was $122,t79.
When small practitioners formed "PAs" or Professional Associations in the 1960s and 1970s, it was primarily to qualify for corporate deferred compensation plan limits.
The fact is, in many cases, a properly structured deferred compensation plan can enable a salaried executive to build an estate normally associated with successful entrepreneurs.