Clearly, no one asked the marketing people before picking out this 1. Who in the world thought up the name 'non-qualified deferred compensation'? Oh, it's detailed alright. But who wants anything 'non-qualified'? Are you wanting a 'non-qualified' doctor, attorney, or accountant? What's worse is deferring payment. How many people desire to work today and receive money in five years? The issue is, non-qualified deferred compensation is a good idea; it only features a name.

Non-qualified deferred compensation (NQDC) is a effective retirement planning tool, especially for owners of closely held corporations (for purposes of this article, I am only going to cope with 'C' corporations). NQDC plans aren't qualified for 2 things; a few of the income tax benefits given qualified pension plans and the worker defense provisions of the Employee Retirement Income Security Act (ERISA). What NQDC plans do provide is flexibility. Great gobs of mobility. Freedom is some thing qualified strategies, after years of Congressional tinkering, lack. The loss of some tax benefits and ERISA terms might seem an extremely small price to pay when you consider the numerous benefits of NQDC plans.

A NQDC approach is a written agreement between the worker and the corporate employer. To study more, you might want to check out: the internet. The contract covers compensation and employment that will be presented in the future. The NQDC agreement gives to the worker the employer's unsecured promise to cover some potential advantage in exchange for ser-vices to-day. The promised future gain may be in one of three basic kinds. Some NQDC plans resemble defined benefit plans because they promise to cover the employee a fixed dollar amount or fixed proportion of salary for a time period after retirement. Another type of NQDC resembles an outlined contribution plan. A fixed volume goes into the employee's 'account' each year, often through voluntary income deferrals, and the worker is eligible for the stability of the account at retirement. The final type of NQDC plan provides a death benefit for the employee's designated beneficiary. Identify more on an affiliated article directory by visiting take shape for life legit.

The key benefit with NQDC is flexibility. With NQDC ideas, the employer may discriminate readily. The manager could pick and choose from among employees, including him/herself, and benefit only a select few. The employer can treat those opted for differently. The benefit stated do not need to follow some of the rules related to qualified plans (e.g. the $44,000 for 2006) annual limit o-n contributions to defined contribution plans). The vesting schedule can be whatever the employer want it to be. Through the use of life-insurance services and products, the tax deferral characteristic of qualified plans may be simulated. Correctly drafted, NQDC programs do not end in taxable income for the employee until payments are made.

To acquire this freedom both the employee and employer should give something up. Discover further on read about take shape for life reviews by browsing our witty wiki. The employer loses the up-front tax deduction for the contribution to the program. Nevertheless, the employer will get a deduction when benefits are paid. The security is lost by the employee offered under ERISA. Nevertheless, usually the employee involved is the business proprietor which mitigates this problem. Also you'll find methods offered to provide the non-owner staff having a way of measuring protection. In addition, the marketing men have gotten hold of NQDC plans, therefore you'll see them named Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..

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