There are two main categories of remuneration conversions: qualified and unsegified. These differ considerably in their legal treatment and, from the employers` point of view, in the purpose they serve. Deferred compensation is often used to refer to unqualified plans, but the term technically covers both. Some of the benefits of a deferred compensation plan, qualified or unqualified, include tax savings, capital gains realization, and pre-retirement distributions. A qualified compensation conversion plan complies with the Job Security Act (ERISA) and includes 401(k) and 403(b) plans. They must have contribution limits and not be discriminatory, open to all employees of the company and beneficial to all. They are also more secure and are kept in a fiduciary account. While investments are not actively managed by participants, people have control over how their deferred compensation accounts are invested and choose from options pre-selected by an employer. A company that has such a plan must offer it to all employees, but not to independent contractors. Qualified deferred offsets are accounted for exclusively for the benefit of their beneficiaries, which means that creditors cannot access the funds if the company is unable to repay its debts. Contributions to these plans are limited by law….
Deferred Compensation Agreement