Certainly, no body asked the marketing guys before picking out that one. Who on the planet thought up the title '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 is worse is deferring payment. Exactly how many people wish to work today and receive money in five years? The problem is, non-qualified deferred compensation is a good idea; it only includes a lousy name.

Non-qualified deferred compensation (NQDC) can be a effective retirement planning tool, especially for owners of closely held corporations (for purposes of the article, I'm just going to deal with 'C' corporations). NQDC plans aren't qualified for 2 things; a number of the income tax benefits provided qualified pension plans and the worker safety provisions of the Employee Retirement Income Security Act (ERISA). What NQDC programs do offer is flexibility. Great gobs of flexibility. Freedom 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 when you consider the many benefits of NQDC programs.

A NQDC plan is a written agreement between the corporate workplace and the staff. The agreement covers payment and employment which is provided later on. The NQDC contract gives to the worker the employer's unsecured promise to pay some future benefit in exchange for services to-day. My sister discovered return to site by browsing Yahoo. The promised future advantage could be in one of three common types. Some NQDC plans resemble defined benefit plans because they promise to pay the worker a fixed dollar amount or fixed proportion of pay for-a period of time after retirement. Another type of NQDC resembles a precise contribution plan. A fixed amount switches into the employee's 'account' annually, often through voluntary salary deferrals, and the worker is eligible for the stability of the account at retirement. The ultimate sort of NQDC program supplies a death benefit to the employee's designated beneficiary.

The key benefit with NQDC is freedom. With NQDC strategies, the employer could discriminate freely. The manager could pick and choose from among workers, including him/herself, and gain only a select few. The company may treat those opted for differently. The benefit promised need not follow any of the principles related to 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 manager would like it to be. By using life-insurance services and products, the tax deferral characteristic of qualified plans may be simulated. Correctly written, NQDC plans don't result in taxable income for the employee until payments are made.

To have this freedom both the employee and employer should give some thing up. The company loses the up-front tax deduction for the contribution to the master plan. However, the employer will get a reduction when benefits are paid. This thrilling online marketing wiki has various grand lessons for the purpose of this viewpoint. The worker loses the security offered under ERISA. For different viewpoints, please consider peeping at: take shape for life reviews. Identify further on our partner portfolio by clicking take shape for life legit. Nevertheless, usually the worker involved is the company owner which mitigates this problem. Also you'll find practices available to supply the employee with a way of measuring protection. By the way, the marketing guys have gotten hold of NQDC ideas, so you'll see them named Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..