Deferred Compensation Plan Tax Treatment In Orange
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State:
Multi-State
County:
Orange
Control #:
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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You can contribute a portion of your salary through payroll deduction before federal and New York State income taxes are calculated. You may defer the taxes if you "roll over" the taxable portion of your lump sum distribution.Tax Treatment: The employer gets a deduction when the award is paid to the executive, and the executive is taxed on receipt. Yes, the city does offer a tax-exempt savings benefits known as a government 457(b) deferred compensation plan. Any salary, bonuses, commissions, and other compensation you agree to defer under an NQDC plan are not taxed in the year in which you earn it. This program allows County of Orange employees to supplement their existing retirement or pension benefits, including.