Harris Texas Adoption of Nonemployee Directors Deferred Compensation Plan is a comprehensive retirement benefit plan designed for nonemployee directors serving in Harris County, Texas. This plan is an attractive offering that allows nonemployee directors to defer a portion of their compensation, providing them with a reliable source of income during their retirement years. The Harris Texas Adoption of Nonemployee Directors Deferred Compensation Plan aims to provide a long-term incentive for nonemployee directors to continue serving on the board while also encouraging their loyalty and commitment to the organization. By deferring a portion of their compensation, directors can maximize their overall retirement savings and enjoy the benefits of tax-deferred growth. This plan offers various types of compensation deferral options to cater to the unique financial goals and needs of nonemployee directors: 1. Basic Deferred Compensation: This option allows directors to defer a specific percentage or dollar amount of their annual cash compensation, including retainers, meeting fees, and committee fees. By choosing this option, directors can take advantage of tax-deferred growth and potentially lower their current taxable income. 2. Stock Deferral Program: Nonemployee directors have the opportunity to defer their equity awards, such as stock options or restricted stock units. This option allows them to postpone the receipt of the shares until a future date, potentially taking advantage of favorable tax treatment. 3. Deferred Compensation Matching: Harris Texas may offer a matching program where the organization contributes additional funds to the deferred compensation account based on the director's contributions. This matching program can enhance the director's retirement savings and provide an attractive incentive to participate in the plan. 4. Lump Sum Distribution: Upon retirement or termination of service, nonemployee directors may choose to receive their deferred compensation as a lump sum payment. This option provides flexibility for directors to manage their retirement income in the way that best suits their financial situation. The Harris Texas Adoption of Nonemployee Directors Deferred Compensation Plan is a valuable tool that helps ensure the long-term financial security of nonemployee directors while fostering their continued commitment to the success of the organization. It empowers directors to make informed decisions about their retirement and enjoy a reliable income stream during their golden years. For a comprehensive understanding of the plan, please refer to the Harris Texas Adoption of Nonemployee Directors Deferred Compensation Plan document, which includes detailed information about the plan's features, eligibility requirements, vesting schedule, distribution options, and investment options.
Harris Texas Adoption of Nonemployee Directors Deferred Compensation Plan with Copy of Plan
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FAQ
Summary. Nonqualified deferred compensation is generally taxed when made available to the recipient without a substantial risk of forfeiture.
Nonqualified plan distributions are reported on Form W-2 in Box 1 as compensation, Medlock said. Any nonqualified plan deferrals will decrease the amount in Box 1. Deferrals and distributions may also be reported on Box 11 of Form W-2, he added.
An employer reports to an employee the total amount of deferrals for the year under a nonqualified deferred compensation plan in box 12 of Form W-2 using code Y.
Generally, your deferred compensation (commonly referred to as elective contributions) isn't subject to income tax withholding at the time of deferral, and you don't report it as wages on Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors, because it isn't included in box 1 wages
An employer reports to an employee the total amount of deferrals for the year under a nonqualified deferred compensation plan in box 12 of Form W-2 using code Y.
Death benefits from nonqualified deferred compensation plans or section 457 plans paid to the estate or beneficiary of a deceased employee are reportable on Form 1099-MISC.
Upon the employee's receipt of the payment in a later year, the NQDC is subject to federal income tax and is reportable on an employee's Form W-2 in boxes 1 (Wages, tips, other compensation), 2 (Federal income tax withheld) and 11 (Nonqualified plans).
More In Retirement Plans Generally, for years beginning after 12/31/2001, an eligible deferred compensation plan under IRC Section 457(b) (or ?section 457 plan?) must meet the written plan document requirements. The plan must comply in form and operation with the requirements of the Code and regulation.
To convert a 409(A) deferred compensation fund to a Roth, you'd have to withdraw the money, pay taxes on it, open a Roth IRA, and deposit to the maximum. With a 457(b) deferred compensation plan, you could roll over the money to an IRA and then roll over the IRA to a Roth.
The payment of the deferred compensation will be reported on Form W-2 even if you are no longer an employee at the time. You are also taxed on the earnings you get on your deferrals when they are paid to you. The rate of return is fixed by the terms of the plan.