Good Idea...Lousy Name

Clearly, no one asked the marketing guys before discovering this one. Who on the planet thought up the title 'non-qualified deferred compensation'? Oh, it's descriptive alright. But who would like anything 'non-qualified'? Are you wanting a 'non-qualified' doctor, attorney, or accountant? What is worse is deferring compensation. 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 includes a lousy name.

Non-qualified deferred compensation (NQDC) is a effective retirement planning tool, particularly for owners of closely-held corporations (for purposes of the article, I'm only likely to deal with 'C' corporations). NQDC plans aren't qualified for 2 things; some of the income tax benefits afforded qualified pension plans and the worker protection provisions of the Employee Retirement Income Security Act (ERISA). What NQDC ideas do offer is freedom. Great gobs of mobility. Freedom is something qualified ideas, after decades of Congressional tinkering, absence. The loss of some tax benefits and ERISA procedures might seem a really small price to pay if you think about the many benefits of NQDC ideas.

A NQDC approach is a written agreement between the corporate manager and the worker. To discover more, consider glancing at: monavie review scams. The contract covers compensation and employment which will be provided in the future. The NQDC contract gives to the staff the employer's unsecured promise to cover some potential benefit in exchange for services to-day. The promised future gain might 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 period of time after retirement. Another type of NQDC resembles an outlined contribution plan. Identify more on our favorite related link - Navigate to this URL: like. A fixed amount goes into the employee's 'account' every year, often through voluntary income deferrals, and the worker is entitled to the stability of the account at retirement. The ultimate form of NQDC program offers a death benefit to the employee's designated beneficiary.

The key benefit with NQDC is flexibility. With NQDC ideas, the employer could discriminate easily. The employer can pick and choose from among workers, including him/herself, and benefit only a select few. The employer can treat these opted for differently. The advantage assured need not 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 regardless of the company want it to be. By utilizing life insurance products, the tax deferral function of qualified plans can be simulated. Properly picked, NQDC programs do not bring about taxable income to the staff until payments are made.

To obtain this freedom both employee and employer should give something up. The company loses the up-front tax deduction for the contribution to the plan. We found out about monavie by searching Yahoo. But, the company will get a discount when benefits are paid. The worker loses the protection provided under ERISA. Be taught new info on this related wiki - Visit this website: success. However, frequently the staff involved is this concern is mitigated by the business owner which. Also you will find techniques offered to supply the non-owner worker having a way of measuring protection. In addition, the marketing folks have gotten your hands on NQDC strategies, therefore you'll see them called Supplemental Executive Retirement Plans or Excess Benefit Plans among other names..