Life · Chapter 10 · Executive Benefit Plans
Deferred Compensation Plan
Definition
A non-qualified arrangement in which a highly paid employee's compensation is paid later — at disability, retirement, or death. No qualified-plan tax advantages; often informally funded with cash value life insurance or annuities. Employee isn't taxed until amounts are received; the employer can't deduct until then either.
Exam tip
"Non-qualified" is the point — the employer may legally discriminate and offer it ONLY to select key employees.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms