Deferred Compensation

AAA

DEFINITION of 'Deferred Compensation'

An amount of earned income that is payable at a later date. Most deferred-compensation plans allow the wage earner to defer tax now so that the funds can be withdrawn and taxed at some point in the future.

INVESTOPEDIA EXPLAINS 'Deferred Compensation'

The most common form of deferred compensation is a retirement plan. Deferring income allows the earner to use the income later in life when they have a lower tax rate. Other examples include pension plans and stock-option plans.

RELATED TERMS
  1. Employee Stock Ownership Plan - ...

    A qualified, defined contribution, employee benefit (ERISA) plan ...
  2. Deferred Income Tax

    A liability recorded on the balance sheet that results from income ...
  3. Tax Deferred

    Investment earnings such as interest, dividends or capital gains ...
  4. Pension Fund

    A fund established by an employer to facilitate and organize ...
  5. Deferred Profit Sharing Plan - ...

    An employer-sponsored Canadian profit sharing plan that is registered ...
  6. Other Post-Employment Benefits ...

    Post-employment benefits that an employee will begin to receive ...
Related Articles
  1. 5 Tax(ing) Retirement Mistakes
    Retirement

    5 Tax(ing) Retirement Mistakes

  2. Payroll Deductions Pay Off
    Retirement

    Payroll Deductions Pay Off

  3. Tax Tips For The Individual Investor
    Retirement

    Tax Tips For The Individual Investor

  4. Get The Most Out Of Employee Stock Options
    Investing Basics

    Get The Most Out Of Employee Stock Options

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center