Deferred compensation

Deferred Compensation

Deferred compensation is a part of the salary that has been set aside for payment on a later date than the actual income was earned. There are two major reasons why deferred compensation is a popular practice that employers across organizations follow. One being the tax benefits on the earned income and the other being the fact that it gives them an opportunity to retain important and key employees. It is not mandatory to opt for deferred compensation, but employees do so in order to waive a certain amount of taxes.