Deferred Compensation Examples In California
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Multi-State
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US-00417BG
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Deferred compensation is an arrangement in which a portion of an employee's income is paid out at a date after which the income is actually earned. A Deferred Compensation Agreement is a contractual agreement in which an employee (or independent contractor) agrees to be paid in a future year for services rendered. Deferred compensation payments generally commence upon termination of employment (e.g., retirement) or death or disability before retirement. These agreements are often geared toward anticipated retirement in order to provide cash payments to the retiree and to defer taxation to a year when the recipient is in a lower bracket. Although the employer's contractual obligation to pay the deferred compensation is typically unsecured, the obligation still constitutes a contractual promise.
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If you retire or separate and you're age 73 or older, you must take your RMD in the year in which you retire or separate. The CalPERS 457 Plan provides employees a lowcost, convenient way to save for retirement through payroll deductions.Some deferred compensation plan examples include a 401(k), 403(b), Keogh plan, or SEP IRA. The Voluntary 457 Deferred Compensation plan provides a convenient way for City employees to save money for retirement with pre-tax earnings.