Deferred Compensation Form For Self Employed In Texas
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State:
Multi-State
Control #:
US-00417BG
Format:
Word;
Rich Text
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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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You have many of the same options to save for retirement on a taxdeferred basis as employees participating in company plans. A 457(b) plan is a tax-deferred retirement savings plan.Funds are withdrawn from an employee's income without being taxed and are only taxed upon withdrawal. Deferred compensation refers to money received in one year for work performed in a previous year often many years earlier. It's designed to be a supplement to your pension and is an additional way to invest long-term directly from your pay. Liable employers report employee wages and pay the unemployment tax. The Texas Unemployment Compensation Act (TUCA) is the basis for reporting requirements. Deferred compensation plans are designed for state and municipal workers, as well as employees of some tax-exempt organizations. Deferred compensation plans have been developed to provide employers with a vehicle to set aside the addition- al funds for their employees.