Clearly, nobody asked the marketing folks before picking out this one. Who on earth thought up the name 'non-qualified deferred compensation'? Oh, it's detailed alright. But who wants something 'non-qualified'? Do you want a 'non-qualified' doctor, attorney, or accountant? What is worse is deferring compensation. Exactly how many people desire to work today and receive money in five years? The problem is, non-qualified deferred compensation is a superb idea; it just includes a poor name.

Non-qualified deferred compensation (NQDC) is a effective retirement planning tool, especially for owners of closely held corporations (for purposes of the article, I am just likely to deal with 'C' corporations). NQDC plans are not qualified for 2 things; a number of the income tax benefits provided qualified pension plans and the employee safety provisions of the Employee Retirement Income Security Act (ERISA). What NQDC ideas do offer is freedom. Great gobs of freedom. Mobility is something capable programs, after decades of Congressional tinkering, lack. Losing of some tax benefits and ERISA procedures might seem a really small price to pay considering the many benefits of NQDC plans.

A NQDC program is a written contract between the corporate employer and the staff. The contract covers settlement and employment which will be presented later on. The NQDC agreement gives to the worker the employer's unsecured promise to cover some future advantage in exchange for services to-day. The promised future advantage may be in one of three basic types. Some NQDC plans resemble defined benefit plans in that they promise to cover the worker a fixed dollar amount or fixed percentage of salary for-a time frame after retirement. A different type of NQDC resembles a precise contribution plan. A fixed amount adopts the employee's 'account' annually, often through voluntary income deferrals, and the employee is entitled to the balance of the account at retirement. The final form of NQDC plan offers a death benefit to the employee's designated beneficiary.

The key benefit with NQDC is flexibility. With NQDC strategies, the employer could discriminate easily. The company can pick and choose from among employees, including him/herself, and benefit just a select few. The company can treat these chosen differently. Be taught additional information on the affiliated portfolio by going to internet scentsy scam. The advantage promised do not need to follow some of the principles connected with qualified plans (e.g. the $44,000 for 2006) annual limit o-n contributions to defined contribution plans). The vesting schedule may be regardless of the boss want it to be. Through the use of life-insurance products and services, the tax deferral element of qualified plans may be simulated. Effectively selected, NQDC plans don't result in taxable income to the worker until payments are made.

To acquire this freedom both employee and employer must give something up. The employer loses the up-front tax deduction for the contribution to the program. But, the company will receive a deduction when benefits are paid. The employee loses the protection provided under ERISA. Worth Reading is a striking resource for additional information concerning where to allow for this hypothesis. But, usually the worker involved is this concern is mitigated by the business owner which. This unique home business review URL has some striking aids for where to ponder this concept. Also you can find practices offered to give you the employee with a way of measuring safety. In addition, the marketing guys have gotten hold of NQDC ideas, therefore you'll see them named Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..

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