Clearly, nobody asked the marketing guys before coming up with this one. Who on the planet thought up the title 'non-qualified deferred compensation'? Oh, it's detailed ok. If you know any thing, you will possibly require to compare about worldventures. But who wants something 'non-qualified'? Are you wanting a 'non-qualified' doctor, attorney, or accountant? What is worse is deferring payment. Exactly how many people desire to work today and receive money in five years? The problem is, non-qualified deferred compensation is a good idea; it only includes a awful name.

Non-qualified deferred compensation (NQDC) is a strong retirement planning tool, particularly for owners of closely held corporations (for purposes of this article, I'm just going to deal with 'C' corporations). NQDC plans are not qualified for 2 things; a number of the income tax benefits given qualified retirement plans and the worker protection provisions of the Employee Retirement Income Security Act (ERISA). What NQDC plans do provide is mobility. Great gobs of freedom. Mobility is something qualified strategies, after years of Congressional tinkering, absence. Losing of some tax benefits and ERISA terms may seem a very small price to pay considering the numerous benefits of NQDC strategies. Division is a influential database for supplementary information about how to see it.

A NQDC strategy is a written agreement between the corporate employer and the worker. The contract covers settlement and employment which will be offered later on. The NQDC contract gives to the worker the employer's unsecured promise to pay some potential benefit in exchange for ser-vices 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 pay the worker a fixed dollar amount or fixed proportion of pay for-a period of time after retirement. A different type of NQDC resembles a definite contribution plan. A fixed volume goes into the employee's 'account' every year, sometimes through voluntary wage deferrals, and the worker is entitled to the balance of the account at retirement. Discover further on our related portfolio by clicking remove frames. The ultimate type of NQDC program supplies a death benefit to the employee's designated beneficiary.

The key advantage with NQDC is mobility. With NQDC options, the employer may discriminate readily. The employer could pick and choose from among workers, including him/herself, and gain only a select few. The company may treat those plumped for differently. Dig up more on worldventures reviews by visiting our elegant paper. The power promised need not follow any of the rules related to qualified plans (e.g. the $44,000 for 2006) annual limit on contributions to defined contribution plans). The vesting schedule may be whatever the boss would love it to be. Through the use of life-insurance services and products, the tax deferral function of qualified plans might be simulated. Effectively picked, NQDC plans don't end up in taxable income to the worker until payments are made.

To obtain this freedom both employee and employer should give something up. The company loses the up-front tax deduction for the contribution to the master plan. But, the employer will receive a deduction when benefits are paid. The employee loses the protection offered under ERISA. Nevertheless, usually the staff involved is the company owner which mitigates this concern. Also there are techniques open to give you the non-owner staff with a way of measuring protection. In addition, the marketing men have gotten your hands on NQDC programs, so you'll see them called Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..

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