Cash Or Deferred Arrangement - CODA

AAA

DEFINITION of 'Cash Or Deferred Arrangement - CODA'

The method of funding any type of qualified profit-sharing or stock bonus plan. Cash or deferred arrangements allow employees to contribute a portion of their salaries to the plan so that their savings can grow tax-deferred. The most common type of CODA is a cash bonus which is paid into their 401(k) plan, but it could also be a salary reduction.

INVESTOPEDIA EXPLAINS 'Cash Or Deferred Arrangement - CODA'

Employees who participate in cash or deferred arrangements may still contribute to traditional or Roth IRAs as well. However, they may not receive the full deduction from a traditional IRA contribution if their incomes are above a certain level. CODA plans allow the individual to fund their retirement and avoid immediate taxation on the diverted contributions.

RELATED TERMS
  1. Profit-Sharing Plan

    A plan that gives employees a share in the profits of the company. ...
  2. Roth 401(k)

    An employer-sponsored investment savings account that is funded ...
  3. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  4. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  5. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  6. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
Related Articles
  1. Retirement

    If a company undergoes an acquisition ...

  2. Retirement

    3 Reasons To Use An Employer-Sponsored ...

  3. Retirement

    Introduction To SIMPLE 401(k) Plans

  4. Entrepreneurship

    Business Owners: A Guide To Qualified ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center