A deferred compensation arrangement is a tax-favored vehicle whereby an employee is able to defer the recognition of income taxes on compensation presently earned but distributed at some point in the future, while the employer is entitled to an immediate deduction for wages paid to the employee.
Some common deferred compensation arrangements include the pension, retirement plan, retirement savings account (401k) or stock option benefit plan. However, the essential benefits of a deferred compensation arrangement are not limited to these types of plans.
The key to a well-conceived deferred compensation plan is achieving the favorable tax treatment that makes these arrangements so beneficial to both the employer and the employee. A properly constructed deferred compensation plan can provide a meaningful asset for employers to bring to the table when attempting to recruit top talent at any position.
However, a poorly constructed plan serves as nothing but a headache for everyone involved.
At Ourednik Law Offices we are knowledgeable in the tax law that governs deferred compensation arrangements. We can custom tailor your plan to meet the needs of you and your company.
Contact Ourednik Law Offices today to discuss your deferred compensation options.