Deferred Compensation

Picking the right time for you

The Situation

It surprises us at Daltium the number of people that we speak to who are unsure if they have access to a deferred compensation plan, or if they do, they are uncertain how best to take advantage. Deferred compensation plans are one instrument you can use to increase wealth by delaying or reducing taxes, but before you decide whether to participate, the tax implications need to be carefully evaluated. Many factors go into determining how much to defer, how much of a payout to choose, and integrating that with your existing assets to optimize your taxes for current and future liquidity needs.

Areas to consider include:

If joining a deferred compensation plan is right for you,

Determining how much you should defer, if any,

Understanding the advantages and disadvantages of deferred compensation plans,

Identifying some of the most common pitfalls that arise due to the use of deferred compensation plans,

Coordinating the payout structure with future income to minimize taxes.

How We Help

When not correctly integrated with your current and future tax expectations, deferred compensation plans may not always deliver a benefit. A deferred compensation plan may start distributing while you are still in your peak income years. Carefully plotting out your current and future tax situation will help determine your options, and once your tax situation is clear, we will guide you as to when and to what extent participation in a plan will benefit you most.

The Daltium process includes:

Determining an appropriate amount of savings and the optimal way to allocate them,

Estimating your present and future tax liabilities to determine how much to defer and when to make withdrawals,

Evaluating your existing assets to create a withdrawal strategy to decide how much you can defer and save on taxes.