Employees who once routinely deferred compensation are now rethinking those habits after tax reform under the Tax Cuts and Jobs Act. One concern is whether it may be better to take income today because of uncertainty about tax increases in the future. This article shows how you should consider tax changes and investment returns when analyzing whether to participate in your company's nonqualified deferred compensation (NQDC) plan.
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In NQDC plans, the fourth quarter is the most common period for electing salary deferrals in the year ahead. One ongoing issue for deferral planning is the need to consider the tax increases of recent years, including the additional Medicare taxes for high earners.
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