Get Arizona Deferred Comp

A deferred compensation plan withholds a portion of an employee's pay until a specified date, usually retirement. The lump sum owed to an employee in this type of plan is paid out on that date. Examples of deferred compensation plans include pensions, 401(k) retirement plans, and employee stock options.

If you plan on retiring early, a deferred compensation plan may be a good way to generate income after your early retirement but before you're eligible for IRA distributions and Social Security.

457(b) Assets can be withdrawn without penalty at any age upon separation from service from the plan sponsor, or age 70½ if still working.

In addition to the mandatory Arizona State Retirement System (ASRS) pension plan, State employees may voluntarily enroll in the Deferred Compensation Plan called AZ Smart Save.

Salary Reduction Arrangements: Employees on a deferred compensation plan may choose to defer a portion of their salary until a future year. For example, an employee that earns $80,000 per year may choose to defer $30,000 of their salary and only receive $50,000 for the current year.

A deferred compensation plan withholds a portion of an employee's pay until a specified date, usually retirement. The lump sum owed to an employee in this type of plan is paid out on that date. Examples of deferred compensation plans include pensions, 401(k) retirement plans, and employee stock options.

Key Differences Deferred compensation plans tend to offer better investment options than most 401(k) plans, but are at a disadvantage regarding liquidity. Typically, deferred compensation funds cannot be accessed, for any reason, before the specified distribution date.