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Deferred Compensation Plans

Deferred compensation plans offer highly compensated key employees an opportunity to earn performance awards, by deferring compensation and taxes until a later date, while reducing select payroll taxes.

Coverage Highlights

Corporate Financial is well-versed in creating and structuring the right Executive Deferred Compensation Plan to meet each of your executive's specific needs. The IRS limits an employee's pretax savings contribution in a 401(k) plan to $22,500 annually in 2023, with an additional $6,500 for those aged 50 and older. For highly compensated executives, maximizing 401(k) contributions can result in an inadequate accumulation of retirement assets.

 

An executive deferred compensation plan allows employers to defer a part of their executive's income so that they will pay taxes later when they withdraw. Corporate Financial can show you the options to postpone all forms of pay, including base salary, bonus, commissions, and special incentives. Even restricted stock units, a significant component of executive compensation, can be deferred.

 

Historically, these plans have focused on the deferral of compensation until retirement. Corporate Financial can help you structure a program that allows for payouts before retirement which can attract the younger executive who is planning for significant pre-retirement expenses like college tuition and second homes. In addition to an executive's voluntary contributions, employers can contribute to an executive's deferred compensation account. Vesting requirements can be used to enhance executive retention.

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Let's schedule a time to discuss all of the possibilities to help your firm attract and retain key executives in your firm.

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