Deferred Compensation Plan Vs 401k In Massachusetts
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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 Massachusetts Deferred Compensation SMART Plan is a voluntary retirement savings program. Commonwealth's 403(b) Plan gives participants the opportunity to supplement your core retirement benefits.An overview of the Massachusetts Deferred Compensation SMART Plan. â–« The 457(b) annual contribution limit is no longer reduced for deferrals to 403(b) and 401(k) plans. â–« You may defer sick, vacation and back pay.