Deferred Compensation Plan For Highly Compensated Employees In North Carolina
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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 457(b) is a supplemental retirement plan that allows employees to set aside payroll-deducted contributions on a pre or after-tax basis. NC 457 Plan Highlights.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 Funds are withdrawn from an employee's income without being taxed and are only taxed upon withdrawal. The plan must be limited to provide benefits for a select group of management or highly compensated employees. Of 2008, amounts paid as differential military pay are included in the Code definition of includible compensation. Deferred compensation allows individuals to set aside income to be paid at a later date, offering potential tax advantages and retirement savings opportunities. The Transfer Benefit provides a monthly stream of income for life which meets an IRS requirement for an exception to the penalty.