What Is a postponed Compensation Account

A postponed Compensation Account is AN agreement wherever AN leader pays out some of AN employee's financial gain within the future rather than once it's attained. in keeping with the ny Times, typically the highest five or ten % of earners participate in postponed Compensation Accounts as a result of corporations area unit solely allowed to ask extremely paid staff.


Examples
Pension and retirement plans, stock choices and postponed bonus plans area unit all samples of payment Accounts.

Benefits
Since several staff do not take cash out till they retire on a reduced yearly financial gain, the principal profit for many postponed compensation is deferring and probably reducing taxation paid. These accounts profit retirees, salespeople et al. World Health Organizationse yearly financial gain might fluctuate and people who may benefit from a style of forced semipermanent savings.

NQDC
Nonqualified postponed Compensation (NQDC) accounts do not give tax advantages as a result of they are doing not satisfy IRS necessities. These plans make up four areas: earnings Reduction Arrangements (such as academics having a part of their earnings command back throughout the college year so that they will be paid throughout the summer months), Bonus Deferral Plans, chapeau Plans (such as Supplemental govt Retirement Plans for a pick cluster of management or extremely paid employees) and Excess profit Plans.

Dangers
Unlike secure 401(k) plans, if AN leader goes bankrupt, the cash in postponed Compensation Accounts might belong to the company's creditors. it's necessary to scan the fine print before into going in any agreements.