For high earners

Move income out of your peak-tax years.

A deferred compensation plan lets a high earner push part of their pay into the future. That income is taxed only when received, likely in a lower-bracket year.

Watch the quick version

See how it works through one simple example.

Is this you?

You are a high earner with access to a deferred comp plan.
These are employer plans, often for executives and key employees.

Here is the idea, in plain words

Your employer plan lets you defer, say, fifty thousand dollars of pay until retirement.

That income is not taxed now. It is taxed only when you actually receive it.

If that is a lower-bracket year, you have simply moved income from a high-tax year to a low-tax one.

What this could be worth

Tax on deferred pay is delayed until you receive it, ideally in a lower-bracket year.
  • 1Confirm your plan's deferral election rules and deadlines.
  • 2Choose how much pay to defer and the payout schedule.
  • 3Receive and pay tax on it later, likely at a lower rate.

Educational guidance, not tax advice. We confirm every figure and your eligibility before you act.

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What to watch out for

The honest version.

  • Nonqualified deferred comp is usually an unsecured promise, exposed to your employer's solvency.
  • Elections are locked in early and hard to change.
  • Payout timing rules are strict under the tax code.

Common questions

When is it taxed?

When you receive the money, not when you earn it.

What is the risk?

Unlike a 401(k), the balance is generally an unsecured claim on your employer.

Who offers it?

Employers, typically to executives and select key employees.

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