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NEW! The Proposed GOP/Trump Tax Cuts: Good Or Bad For Pretax Compensation Deferral?

The Trump administration’s recent tax-cut proposal, along with activity in Congress, has complicated the decision of whether to participate in your company’s NQDC plan. This article provides a perspective on how to decide whether or not to defer pretax compensation.

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Key Points in This Article
The Trump administration's recent tax-cut proposal, along with activity in Congress, has complicated the decision of whether to participate in your company's nonqualified deferred compensation (NQDC) plan. However, while it appears counterintuitive, lower tax rates can make deferral more attractive.
What really matters is the spread between your tax rate now and your tax rate at retirement.
Participating in a nonqualified deferred compensation plan could provide a critical component of your future income, but there are three circumstances that may offset the benefits of pretax income deferral.