What is a Deferred Compensation Plan?
A deferred compensation plan is a plan, which allows for deferral of the payment of compensation until a later date. BART’s Deferred Compensation Plan is a Plan established under Section 457 of the Internal Revenue Code. As long as the Plan satisfies the requirements of Internal Revenue Code Section 457, the amount deferred and paid into the Plan, and the earnings on those amounts, are not included in your current income for tax purposes. The funds are not taxed until you receive a distribution from the plan.
A deferred compensation plan is a retirement savings plan that allows participants to save money for after retirement. Taxes on the savings are deferred until the money is withdrawn from the account. Thus the name deferred compensation. BART’s Deferred Compensation Plan is a Plan established under Section 457 of the Internal Revenue Code and therefore is also known as a 457 plan.
