Demonstrably, no body asked the marketing folks before discovering this 1. Discover extra information on this affiliated article by visiting online marketing. Who in the world thought up the name 'non-qualified deferred compensation'? Oh, it is detailed ok. 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 wish to work to-day and receive money in five years? The problem is, non-qualified deferred compensation is a great idea; it only features a name.
Non-qualified deferred compensation (NQDC) is a powerful retirement planning tool, particularly for owners of closely-held corporations (for purposes of the article, I'm only likely to cope with 'C' corporations). NQDC plans are not qualified for two things; a few of the income tax benefits given qualified retirement plans and the worker safety provisions of the Employee Retirement Income Security Act (ERISA). What NQDC ideas do provide is freedom. Discover more on this affiliated site by visiting per your request. Great gobs of freedom. We found out about tecademics scam by browsing books in the library. Flexibility is something qualified plans, after years of Congressional tinkering, lack. The loss of some tax benefits and ERISA procedures may seem a really small price to pay considering the many benefits of NQDC strategies.
A NQDC approach is a written contract between the corporate workplace and the employee. The agreement covers employment and compensation which is provided in the future. The NQDC contract gives to the employee the employer's unsecured promise to pay some potential advantage in exchange for services today. The promised future benefit could be in one of three common forms. Discover supplementary resources on the tecademics is a scam by visiting our powerful site. Some NQDC plans resemble defined benefit plans because they promise to cover the worker a fixed dollar amount or fixed proportion of income for-a time period after retirement. Another type of NQDC resembles a definite contribution plan. A fixed amount goes into the employee's 'account' every year, often through voluntary wage deferrals, and the worker is eligible for the balance of the account at retirement. The last form of NQDC plan supplies a death benefit to the employee's designated beneficiary.
The key advantage with NQDC is flexibility. With NQDC programs, the employer can discriminate openly. The employer could pick and choose from among workers, including him/herself, and gain only a select few. The employer may treat these chosen differently. The advantage assured do not need to follow the rules connected with qualified plans (e.g. the $44,000 for 2006) annual limit o-n contributions to defined contribution plans). The vesting schedule can be whatever the company would like it to be. Through the use of life-insurance products, the tax deferral feature of qualified plans may be simulated. Effectively drafted, NQDC plans don't bring about taxable income to the employee until payments are made.
To obtain this freedom both employer and employee must give something up. The employer loses the up-front tax deduction for the contribution to the program. However, the company will get a deduction when benefits are paid. The worker loses the security provided under ERISA. However, frequently the worker involved is the company owner which mitigates this problem. Also you can find methods available to supply the employee using a measure of protection. Incidentally, the marketing guys 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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