From a tax perspective, participating in a nonqualified deferred compensation plan is an effective tax planning strategy when the employee anticipates that her marginal tax rate will be higher when she receives the deferred compensation than when she defers the compensation.

Question

Quizplus · Accepted Answer

Deferring compensation is generally beneficial when the employee expects a lower marginal tax rate upon receipt, not a higher one, to minimize tax liability.

From a Tax Perspective, Participating in a Nonqualified Deferred Compensation