The Journaling of Silver 356
 

Good Idea...Lousy Name


Clearly, nobody asked the marketing guys before discovering this one. Who on the planet thought up the title 'non-qualified deferred compensation'? Oh, it is detailed okay. But who would like anything 'non-qualified'? Would you like a 'non-qualified' doctor, attorney, or accountant? What is worse is deferring payment. Exactly how many people need to work today and get paid in five years? The thing is, non-qualified deferred compensation is a great idea; it only has a poor name.

Non-qualified deferred compensation (NQDC) can be a strong retirement planning tool, specially for owners of closely-held corporations (for purposes of the article, I'm just going to cope with 'C' corporations). NQDC plans aren't qualified for two 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 ideas do provide is freedom. Great gobs of flexibility. Flexibility is some thing capable plans, after years of Congressional tinkering, absence. The loss of some tax benefits and ERISA provisions may seem a very small price to pay when you consider the many benefits of NQDC strategies. Learn more on our related article - Click here: visit.

A NQDC plan is a written agreement between the employee and the corporate manager. The contract includes payment and employment that will be offered in the future. The NQDC agreement gives to the worker the employer's unsecured promise to pay some potential benefit in exchange for services to-day. The promised future gain might be in one of three general types. To get a different perspective, please consider having a peep at: tecademics. Some NQDC plans resemble defined benefit plans because they promise to pay the worker a fixed dollar amount or fixed percentage of income for-a time period after retirement. A different type of NQDC resembles a definite contribution plan. A fixed volume adopts the employee's 'account' each year, often through voluntary salary deferrals, and the employee is eligible for the balance of the account at retirement. The ultimate sort of NQDC approach offers a death benefit to the employee's designated beneficiary.

The key advantage with NQDC is freedom. With NQDC strategies, the employer could discriminate openly. The manager could pick and choose from among workers, including him/herself, and gain only a select few. The employer can treat those opted for differently. The benefit promised do not need to follow any of the rules associated with qualified plans (e.g. the $44,000 for 2006) annual limit on contributions to defined contribution plans). The vesting schedule may be long lasting company would like it to be. Through the use of life insurance products, the tax deferral characteristic of qualified plans might be simulated. Properly selected, NQDC programs do not end in taxable income for the employee until payments are made. If you know any thing, you will certainly require to explore about check out tecademics legit.

To have this flexibility the employee and employer should give some thing up. The employer loses the up-front tax deduction for the contribution to the plan. However, the employer will receive a reduction when benefits are paid. The security is lost by the employee provided under ERISA. But, frequently the employee involved is this concern is mitigated by the business owner which. We discovered home business by searching Google. Also you can find methods offered to supply the non-owner staff having a way of measuring security. Incidentally, the marketing men have gotten hold of NQDC plans, so you'll see them named Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..