Obviously, no body asked the marketing people before discovering that one. Who in the world thought up the title 'non-qualified deferred compensation'? Oh, it is detailed alright. But who would like something 'non-qualified'? Do you want a 'non-qualified' doctor, lawyer, or accountant? What is worse is deferring compensation. Exactly how many people need to work to-day and get paid in five-years? The problem is, non-qualified deferred compensation is a good idea; it just has a poor name.
Non-qualified deferred compensation (NQDC) is a strong retirement planning tool, particularly for owners of closely held corporations (for purposes of this article, I'm only going to deal with 'C' corporations). NQDC plans aren't qualified for two things; a few of the income tax benefits provided qualified retirement plans and the employee protection provisions of the Employee Retirement Income Security Act (ERISA). What NQDC plans do offer is flexibility. Great gobs of freedom. Flexibility is something capable plans, after decades of Congressional tinkering, lack. Losing of some tax benefits and ERISA conditions might seem an extremely small price to pay considering the numerous benefits of NQDC plans.
A NQDC approach is a written agreement between the staff and the corporate workplace. The contract covers employment and compensation which is provided in the future. The NQDC agreement gives to the worker the employer's unsecured promise to cover some future benefit in exchange for ser-vices today. The promised future advantage may be in one of three common types. Some NQDC plans resemble defined benefit plans in that they promise to cover the employee a fixed dollar amount or fixed percentage of pay for a time frame after retirement. Another type of NQDC resembles a precise contribution plan. A fixed volume switches into the employee's 'account' each year, sometimes through voluntary income deferrals, and the employee is eligible for the stability of the account at retirement. The last form of NQDC strategy provides a death benefit for the employee's designated beneficiary.
The key advantage with NQDC is mobility. This interesting worldventures legit site has oodles of wonderful cautions for the purpose of it. With NQDC strategies, the employer can discriminate easily. Browse here at the link world ventures to check up when to see this belief. The employer could pick and choose from among workers, including him/herself, and benefit just a select few. The employer can treat those opted for differently. The advantage promised do not need to follow some of the principles associated with 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 boss want it to be. By utilizing life-insurance products, the tax deferral feature of qualified plans can be simulated. Properly selected, NQDC programs do not bring about taxable income for the worker until payments are made. If you know anything, you will maybe need to learn about like.
To obtain this flexibility both the employer and employee 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 deduction when benefits are paid. Discover extra info about worldventures is a scam by going to our stately article directory. The security is lost by the employee provided under ERISA. Nevertheless, often the staff involved is this concern is mitigated by the business owner which. Also you'll find techniques offered to supply the non-owner employee using a way of measuring security. In addition, the marketing people have gotten your hands on NQDC strategies, so you'll see them called Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..
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