Washington Deferred Compensation Agreement - Short Form

• Category: Employment - Compensation
• State: Multi-State
• Control #: US-00417BG
• Format: Word; Rich Text

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. The Washington Deferred Compensation Agreement — Short Form, commonly referred to as the DC Agreement, is a contractual arrangement that provides participants with the opportunity to save for retirement through pre-tax contributions. It is governed by the Washington State Department of Retirement Systems (DRS) and is designed to supplement the retirement benefits provided by the State's Pension Plan. The DC Agreement allows eligible employees of Washington state agencies, higher education institutions, and participating local governments to contribute a portion of their salary on a pre-tax basis to a designated account. The contributions are invested in a menu of investment options, such as mutual funds or fixed income securities, selected by the participant. The primary objective of the DC Agreement is to provide employees with a tax-advantaged way to save for retirement, giving them more control over their future financial security. By deferring some of their salary, participants can lower their taxable income and potentially reduce their overall tax liability. Additionally, since the contributions are made pre-tax, the investment growth is tax-deferred until withdrawals are made in retirement when the tax rates are often lower for most retirees. There are several features and benefits associated with the Washington Deferred Compensation Agreement — Short Form. Participants have the flexibility to choose from various contribution levels, which can be changed at any time during the year, allowing them to adjust their savings strategy as needed. Additionally, the contributions can be allocated between different investment funds based on the participant's risk tolerance and investment goals. Another notable feature is the ability to make catch-up contributions for those nearing retirement age. These catch-up contributions allow individuals who have not maximized their contributions in previous years to make higher contributions, thereby bridging the savings gap and potentially increasing their retirement nest egg. The DC Agreement offers comprehensive online tools and resources to assist participants in managing their retirement savings. These tools provide investment education, retirement planning calculators, and personalized account information, empowering participants to make informed decisions about their savings. It is important to note that while the Washington Deferred Compensation Agreement — Short Form provides a valuable retirement savings opportunity, it does not guarantee investment returns or retirement income. The participant bears the investment risk, and the value of the account will fluctuate based on the performance of the chosen investment options. Different types or variations of the Washington Deferred Compensation Agreement — Short Form may exist based on specific employer plans or modifications made by various government entities. However, the fundamental purpose and structure of the DC Agreement remain consistent across these variations.

The Washington Deferred Compensation Agreement — Short Form, commonly referred to as the DC Agreement, is a contractual arrangement that provides participants with the opportunity to save for retirement through pre-tax contributions. It is governed by the Washington State Department of Retirement Systems (DRS) and is designed to supplement the retirement benefits provided by the State's Pension Plan. The DC Agreement allows eligible employees of Washington state agencies, higher education institutions, and participating local governments to contribute a portion of their salary on a pre-tax basis to a designated account. The contributions are invested in a menu of investment options, such as mutual funds or fixed income securities, selected by the participant. The primary objective of the DC Agreement is to provide employees with a tax-advantaged way to save for retirement, giving them more control over their future financial security. By deferring some of their salary, participants can lower their taxable income and potentially reduce their overall tax liability. Additionally, since the contributions are made pre-tax, the investment growth is tax-deferred until withdrawals are made in retirement when the tax rates are often lower for most retirees. There are several features and benefits associated with the Washington Deferred Compensation Agreement — Short Form. Participants have the flexibility to choose from various contribution levels, which can be changed at any time during the year, allowing them to adjust their savings strategy as needed. Additionally, the contributions can be allocated between different investment funds based on the participant's risk tolerance and investment goals. Another notable feature is the ability to make catch-up contributions for those nearing retirement age. These catch-up contributions allow individuals who have not maximized their contributions in previous years to make higher contributions, thereby bridging the savings gap and potentially increasing their retirement nest egg. The DC Agreement offers comprehensive online tools and resources to assist participants in managing their retirement savings. These tools provide investment education, retirement planning calculators, and personalized account information, empowering participants to make informed decisions about their savings. It is important to note that while the Washington Deferred Compensation Agreement — Short Form provides a valuable retirement savings opportunity, it does not guarantee investment returns or retirement income. The participant bears the investment risk, and the value of the account will fluctuate based on the performance of the chosen investment options. Different types or variations of the Washington Deferred Compensation Agreement — Short Form may exist based on specific employer plans or modifications made by various government entities. However, the fundamental purpose and structure of the DC Agreement remain consistent across these variations.