What is Deferred Compensation?

  • Deferred compensation is a certain amount of compensation from an employee that is put to one side to be paid at a later date.
  • The different types of deferred compensation contain pension plans, stock option plans and retirement plans.
  • A deferred compensation plan is a way for employers to motivate their key employees and hold onto them.
  • Deferred compensation can also be qualified or non-qualified. These are the two types of deferred compensation.
  • Qualified deferred compensation plans are governed by planned pension plans. If an organisation has this put into the position they must offer it to all their employees.
  • Non - qualified deferred compensation plans are a way for employers to attract and motivate key employees in a workplace to stay.
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