Many employees have Deferred Compensation Plans, and there are a wide variety of plans, each with different features. This article will discuss the options and help you determine the best way to enter your Deferred Compensation in your Plan.
Deferred Compensation Plans can be Qualified or Non Qualified
Both types of plan may have provider-specific distribution schedules, but overall
a Qualified Plan functions similar to a 401k, with RMDs at age 72. A non Qualified Plan typically does not require RMDS.
Simple Method
If your Deferred Compensation will be paid out as future income, navigate to My Plan > Income > Pensions and enter the future income.
Complex Method
Your first step will be to determine you account type, contribution schedule, and distribution schedule.
Deductible Contributions
If you are contributing to the Deferred Compensation Plan while working we recommend that you create a 401k account.
STEP 1: Head over to in My Plan > Accounts and Assets
STEP 2: Press Create an Account
STEP 3: Give the account a descriptive name, Deferred Compensation ACE Employer, for example
STEP 4: Enter the balance
STEP 5: Enter the optimistic and pessimistic growth rates
STEP 6: Add any relevant contributions. Your contributions will be deducted from your income, and you can view this deduction in your Insights > Taxes > Deductions chart.
Distributions
If you are currently contributing and subject to RMDs: If your Deferred Compensation Plan is a qualified plan that will require RMDs, once you create a 401k account, Planner will model RMDs.
If you are currently contributing and have a distribution schedule: If you have a payout schedule for the deferred compensation, once you create a 401k account you'll want to exclude the account from your withdrawal strategies.
Next, you'll want to model the distribution schedule. Head on over to My Plan > Money Flows > Transfers, and enter the payout schedule. Make the from account be the Deferred Compensation account and the to account being a taxable savings account. You can monitor the deferred comp's balance over time by using Insights > Savings.
Retired/Retiring and receiving Deferred Compensation lump sum payments Method
Head on over to My Plan > Income > Pensions and enter this as a Lump Sum Pension and select the appropriate tax treatment.
