Which is a better savings tool, the Deferred Compensation Plan or an IRA?
The Deferred Compensation Plan may be better for a number of reasons. With deferred compensation, every dollar you contribute and earn is tax-deferred. With an IRA, your contributions may not be tax-deferred (consult your tax advisor), and even if they are, your maximum annual IRA contribution is just $5,000 in 2008. Another advantage of the Deferred Compensation Plan is that it makes saving automatic through payroll deductions, whereas an IRA requires a conscious decision and self-discipline to make deposits.
Related Questions
- If I am receiving distributions from my New York State Deferred Compensation Plan account and an IRA, can I deduct $40,000 (if at least $20,000 is received from each account)?
- Which is a better savings tool, the Deferred Compensation Plan or an IRA?
- How is the Deferred Compensation Plan different from an IRA?
