Define: Deferred Compensation

Deferred compensation is a portion of an employee’s earnings that is set aside to be paid at a later date, typically after retirement.

Yes, deferred compensation is generally taxable when it is paid out to the employee.

Deferred compensation is typically an agreement between an employer and employee to defer a portion of the employee’s salary, while a 401(k) or pension plan is a specific retirement savings vehicle offered by the employer.

In most cases, yes, you can change the amount of your deferred compensation, but it may be subject to certain restrictions or limitations set by your employer.

The treatment of deferred compensation upon leaving a job will depend on the specific terms of the deferred compensation plan and any applicable laws or regulations.

There may be penalties for early withdrawal of deferred compensation, similar to early withdrawal penalties for retirement accounts.

It may be possible to roll over deferred compensation into another retirement account, but this will depend on the specific terms of the deferred compensation plan and any applicable laws or regulations.

It is unlikely that you can take a loan against your deferred compensation, as it is typically not considered a liquid asset.

Yes, in many cases, you can designate a beneficiary to receive your deferred compensation in the event of your death.

The potential risks of deferred compensation may include changes in tax laws, employer bankruptcy, and restrictions on accessing the funds. It is important to carefully consider these risks before participating in a deferred compensation plan.