Deferred Compensation Plan For Non-employee Directors In Texas
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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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FAQ
Cons of Nonqualified Retirement Plans Strict distribution schedules. Lack of ERISA protections: If a company faces financial difficulties, the benefits promised under these plans could be at risk, potentially leaving employees without the retirement funds they expected.
The Deferred Compensation Plan is a voluntary IRS §457(b) Plan that allows participants to voluntarily defer receipt and taxation of a portion of their regular earnings until after they retire or separate from service.
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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 Funds are withdrawn from an employee's income without being taxed and are only taxed upon withdrawal.All Directors who are not employees of the Company or any subsidiary of the Company shall be eligible to participate in the Plan. 4. Learn about common tax and Form 990 reporting issues associated with nonqualified deferred compensation arrangements. An executive deferred compensation plan allows highincome employees to put off paying taxes on part of their income until retirement. NACo's Deferred Compensation Program has helped more than 1.5 million county employees and retirees save for and live comfortably in retirement. There are two mandatory retirement program options, the Teacher Retirement System of Texas (TRS), and the Optional Retirement Program (ORP).