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Advantages To Pre-Tax Deferral Of Income In An Uncertain Tax Environment

Employees who once routinely deferred compensation are rethinking those habits and wondering whether it might be better to take income today because taxes will be higher tomorrow. This article shows how you should consider tax rate changes and investment returns when analyzing whether to participate in your company's nonqualified deferred compensation (NQDC) plan.

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Key Points in This Article
Tax increases are prompting renewed interest in nonqualified deferred compensation (NQDC).
The analysis in this article compares deferred compensation to the after-tax investment of the same money.
When tax rates rise, NQDC can perform better over the long term than a comparable personal investment account.