Deferred Compensation Plan Vs 401k In Georgia
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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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PSR offers two plans for employees to use—a 457 plan and a 401(k) plan. Deferred compensation plans tend to offer better investment options than most 401(k) plans, but are at a disadvantage regarding liquidity.What is Peach State Reserves – The Georgia Retirement Investment Plan? Georgia State Employees' Pension and Savings Plan (GSEPS) members are eligible for a match on their 401(k) Plan contributions. Deferred compensation allows individuals to set aside income to be paid at a later date, offering potential tax advantages and retirement savings opportunities. 457(b) plans and 401(k) plans are very similar. Both offer you the opportunity to make tax-deferred contributions to a retirement account. Deferred compensation refers to money received in one year for work performed in a previous year often many years earlier.