Deferred Compensation Plan For Executives In California
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Multi-State
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US-00418BG
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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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The CalPERS 457 Plan is a voluntary deferred retirement savings plan that allows you to defer any amount, subject to annual limits, from your paycheck. A nonqualified deferred compensation plan can reduce your taxable income, but there are risks to consider.The CalPERS 457 Plan provides employees a lowcost, convenient way to save for retirement through payroll deductions. Deferred compensation is a financial arrangement where employees can elect to receive a portion of their income at a later date, typically during retirement. 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 Funds are withdrawn from an employee's income without being taxed and are only taxed upon withdrawal. Before implementing a nonqualified deferred compensation plan, employers should consider the benefits and tax and compliance consequences. This plan allows the executives to defer part of their compensation during the years of employment. This article examines three types of common executive compensation plans and offers ideas to maximize the financial opportunity they create.