Before you complete this form, please read the accompanying literature in the 457. How does the 457(b) deferred compensation plan work?With a 457(b) deferred compensation plan, you postpone receiving (defer) a portion of your salary. A deferred compensation agreement is an agreement between a company and an employee that withholds paying some of the employee's salary. A nonqualified deferred compensation plan can reduce your taxable income, but there are risks to consider. When an employee dies, deferred compensation may be due and payable to the employee's beneficiary or estate.