Deferred Compensation Plan For Highly Compensated Employees In Wake
Category:
State:
Multi-State
County:
Wake
Control #:
US-00418BG
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Word;
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Description
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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Deferred compensation plans have been developed to provide employers with a vehicle to set aside the addition- al funds for their employees. NQDC plans offer highly compensated and key employees an opportunity to earn performance awards, defer compensation and taxes until a later date.All 401(k) plans must define the compensation that the employer will use to allocate plan contributions to participants ("plan compensation"). Deferred compensation plans withhold a certain percentage of an employee's salary or wages to fund a specific future benefit.