Anon-qualified deferred compensation(NQDC) plan allows a service provider (e.g., an employee) to earn wages, bonuses, or other compensation in one year but receive the earnings—and defer theincome taxon them—in a later year. Doing this provides income in the future (often after they've ...
A 401(k) plan is an example of a qualified deferred compensation plan. Unlike NQDC plans, qualified deferred compensation plans are only for employees, and they have contribution limits. Qualified plans are also protected, meaning you must separate the funds from the rest of your business money...
Non-qualified deferred compensation plans are a great bonus but do come with risks. A portion of an employee'ssalary is deferred to a later date. This reduces the taxes paid that year, which is a benefit. The amount deferred, however, does not come with some of the benefits of qualified...
However, there is an exception under the 409A regulations for independent con- tracts who provide significant services to two or more unrelated service recipients (with "significant" meaning that no more than 70% of the independent contractor is received from any one client), that they are not...