HR Glossary

Deferred Compensation

By October 22, 2019 No Comments

What is Deferred Compensation?  Definition below:

Deferred Compensation is a type of payment plan in which an employee receives their payment at a later date, usually in the next tax year. A deferred compensation plan can also refer to pension or retirement plans.

Income from a deferred compensation plan is not taxable until that payment is received by the employee. Employers and employees who choose deferred compensation must take care to follow specific guidelines when filing taxes in order to avoid IRS penalties.

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