Deferred Compensation Plans

Deferred compensation plans are financial arrangements that allow employees to earn income now but receive payment at a later date, often for tax advantages or retirement savings. Typically, these plans let employees set aside a portion of their salary, bonuses, or commissions, which postpones taxes until they withdraw the money, usually during retirement. This can result in lower taxable income in their peak earning years. Types of these plans include 401(k)s and non-qualified deferred compensation plans. They can help individuals save for the future while potentially benefiting from investment growth over time.