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Tax Changes That Affect Your Planning For Nonqualified Deferred Compensation

The enhanced capacity for tax planning is one of the main attractions of nonqualified plans. When your tax rates increase, the advantages of NQDC plans grow. This article explains the impact of tax changes on your NQDC.



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Key Points in This Article
Generally, a rise in your tax rates increases the appeal of deferring income into the future through nonqualified plans.
Deferrals can keep your yearly taxable income below the thresholds for the top tax rates on ordinary income and capital gains and dividends, as well as the income thresholds of the additional Medicare taxes.
Income from NQDC in the year of distribution can cause your income to exceed these thresholds.