Obviously, nobody asked the marketing guys before discovering this one. Who on the planet thought up the title 'non-qualified deferred compensation'? Oh, it's descriptive ok. But who wants something 'non-qualified'? Are you wanting a 'non-qualified' doctor, attorney, or accountant? What's worse is deferring compensation. Just how many people wish to work to-day and receive money in five years? The thing is, non-qualified deferred compensation is a superb idea; it only includes a poor name.

Non-qualified deferred compensation (NQDC) can be a strong retirement planning tool, especially for owners of closely held corporations (for purposes of the article, I'm just likely to cope with 'C' corporations). NQDC plans aren't qualified for two things; some of the income tax benefits given qualified retirement plans and the employee defense provisions of the Employee Retirement Income Security Act (ERISA). What NQDC ideas do offer is mobility. Great gobs of mobility. Dig up further on our affiliated portfolio by clicking take shape for life. Freedom is something qualified plans, after years of Congressional tinkering, absence. Losing of some tax benefits and ERISA terms might seem a really small price to pay considering the many benefits of NQDC strategies.

A NQDC approach is a written agreement between the corporate workplace and the worker. The agreement includes employment and settlement which is presented later on. The NQDC agreement gives to the worker the employer's unsecured promise to pay some future advantage in exchange for services to-day. The promised future advantage may be in one of three basic forms. Some NQDC plans resemble defined benefit plans because they promise to pay the worker a fixed dollar amount or fixed percentage of pay for a period of time after retirement. Be taught additional information on our favorite related wiki - Click here: take shape for life legit article. A different type of NQDC resembles a precise contribution plan. A fixed volume goes into the employee's 'account' each year, sometimes through voluntary salary deferrals, and the employee is eligible for the stability of the account at retirement. The final form of NQDC program provides a death benefit to the employee's designated beneficiary.

The key advantage with NQDC is freedom. With NQDC options, the employer could discriminate easily. The company can pick and choose from among employees, including him/herself, and gain only a select few. The employer can treat those opted for differently. For supplementary information, please consider peeping at: take shape for life is a scam. The power assured need not follow 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 employer would love it to be. Through the use of life insurance products, the tax deferral element of qualified plans might be simulated. Properly written, NQDC programs do not bring about taxable income for the employee until payments are made.

To have this freedom both employer and employee should give some thing up. The company loses the up-front tax deduction for the contribution to the program. But, the company will receive a reduction when benefits are paid. The employee loses the protection offered under ERISA. However, usually the staff involved is the business owner which mitigates this concern. Also you will find practices available to supply the employee using a measure of safety. Incidentally, the marketing men have gotten your hands on NQDC plans, therefore you'll see them called Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..

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