Obviously, no body asked the marketing guys before discovering this 1. Who on the planet thought up the title 'non-qualified deferred compensation'? Oh, it is detailed ok. But who would like something 'non-qualified'? Are you wanting a 'non-qualified' doctor, attorney, or accountant? What's worse is deferring payment. How many people need to work to-day and receive money in five-years? The problem is, non-qualified deferred compensation is a superb idea; it just includes a lousy name. This impressive nerium scam portfolio has specific disturbing tips for the meaning behind this concept.

Non-qualified deferred compensation (NQDC) is a strong retirement planning tool, particularly for owners of closely-held corporations (for purposes of the article, I'm only going to deal with 'C' corporations). NQDC plans aren't qualified for two things; some of the income tax benefits given qualified pension plans and the employee defense provisions of the Employee Retirement Income Security Act (ERISA). What NQDC programs do provide is freedom. Great gobs of mobility. Mobility is some thing capable programs, after decades of Congressional tinkering, absence. Losing of some tax benefits and ERISA conditions might seem an extremely small price to pay when you consider the numerous benefits of NQDC plans.

A NQDC program is a written contract between the staff and the corporate workplace. The agreement covers payment and employment that will be provided later on. If you choose to get extra resources on source, there are many on-line databases people might think about investigating. The NQDC agreement gives to the worker the employer's unsecured promise to cover some future advantage in exchange for ser-vices to-day. The promised future benefit might be in one of three common forms. Some NQDC plans resemble defined benefit plans in that they promise to pay the employee a fixed dollar amount or fixed percentage of salary for-a period of time after retirement. Visiting link probably provides cautions you could tell your family friend. Another kind of NQDC resembles an outlined contribution plan. A fixed volume switches into the employee's 'account' every year, sometimes through voluntary income deferrals, and the worker is entitled to the balance of the account at retirement. The final form of NQDC program provides a death benefit to the employee's designated beneficiary.

The key benefit with NQDC is mobility. With NQDC programs, the employer can discriminate easily. The manager can pick and choose from among workers, including him/herself, and gain just a select few. The company may treat those plumped for differently. The advantage promised will not need to follow any of the principles related to qualified plans (e.g. the $44,000 for 2006) annual limit on contributions to defined contribution plans). The vesting schedule may be regardless of the company would like it to be. By utilizing life-insurance services and products, the tax deferral element of qualified plans can be simulated. Properly drafted, NQDC programs don't end up in taxable income to the employee until payments are made.

To obtain this flexibility both the employer and employee should give some thing up. The employer loses the up-front tax deduction for the contribution to the master plan. Nevertheless, the manager will receive a deduction when benefits are paid. The employee loses the security offered under ERISA. However, usually the worker involved is this concern is mitigated by the business owner which. Also you will find methods available to give you the non-owner employee having a way of measuring safety. In addition, the marketing people have gotten hold of NQDC programs, therefore you'll see them called Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..

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