As you’re nearing retirement, it’s important that you use all the resources at your disposal to get ready for your golden years. Deferred compensation may be a tool that you can use to help. Deferred compensation lets you direct part of your salary into a specific plan or account. Your employer then pays you that income at a future date, typically when you retire. In addition to helping you save for your golden years, a deferred compensation plan can be an ideal tax deferral strategy. Deferring pre-tax dollars lowers your taxable income. In many cases, you don’t pay taxes on those contributions until you retire. At that time, you’ll likely be in a lower tax bracket, meaning you owe fewer taxes on distributions from the plan.
There Are Two Types of Deferred Compensation Plans:
Qualified Deferred Compensation Plans
Non-Qualified Deferred Compensation Plans
What to Consider When Making a Deferred Contribution
Before diving into your deferred contribution strategy, it’s a good idea to consider the following:
Deferred compensation plans are just one of many options to help you plan for your upcoming retirement. What works best for you will depend on your circumstances and goals. To talk through your retirement planning options, contact the office.
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.
The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.
Put Your Deferred Compensation Strategy Into Place
April 17, 2023