A guide to deferred compensation plans: Pros, cons and how they can work for you

This episode offers a comprehensive overview of deferred compensation plans, explaining their definition as agreements where employees postpone receiving wages to a later fiscal year, thereby delaying taxation. It outlines various examples, such as pension plans and stock options, and thoroughly discusses the advantages and disadvantages for both employees and employers, including tax benefits and retention perks versus potential financial risks and regulatory burdens. The article further illustrates the practical application of deferred compensation through a real-world example of a teacher utilizing the program for a sabbatical, highlighting the importance of careful planning and professional consultation for anyone considering such an arrangement. Ultimately, the text emphasizes deferred compensation as a flexible financial tool for modern workforces, offering opportunities for both retirement planning and lifestyle flexibility.