Deferred Compensation

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The Scenario

Many people we meet with are not aware they have access to a deferred compensation plan, or if they do, they are unsure how best to use it. Deferred compensation plans are one of many tools you can use to reduce taxes, but it must be coordinated with future tax projections to determine if you should participate. There are many variables that go into how much to defer, what payout to select, and then coordinating that with your current assets to optimize your taxes for current and future cash flow needs.

Key Considerations

  • Should you participate in a deferred compensation plan?
  • Do you know how much you should defer into your deferred compensation plan?
  • Are you aware of the advantages and disadvantages of this type of plan?
  • Are you confident you will have tax savings because of participation in this plan?
  • Have you coordinated the payout structure with future income estimates to reduce taxes?

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How we help

When not properly coordinated with your current and future tax expectations, deferred compensation plans may not always yield a tax benefit.  A deferred compensation plan can have requirements to begin distributions while still in peak earnings years.  Carefully mapping out your current and future tax situation will help to examine your options through a detailed framework.  Once your tax situation is understood, we will advise you on when and to what extent you may want to participate in a deferred compensation plan.

Our process includes:

  • Determining your comfortable savings level and how best to allocate those dollars in each plan
  • Modeling your current and future tax estimates to make an optimal decision on how much income to defer and when to receive it
  • Analyzing your current assets to formulate a withdrawal strategy to optimize the amount you can defer and save on taxes

Want peace of mind, knowing that your financial future is in good hands?

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