Things to consider
The Deferred Compensation Plan offers several advantages.
- First, you can use it to defer compensation — taxes on that compensation are deferred until you take a distribution.
- Any income taxes on potential investment earnings on the compensation you defer are postponed. Your compensation has the chance to grow tax-deferred, as it would in a 401(k) plan.
Other advantages
- Distribution elections. When you initially enroll in the plan, you will make a distribution election for your future company contributions to the DCP on or after May 1, 2012. In addition, if you choose to defer base pay and/or bonus, you will make separate distribution elections for each source of deferral chosen. You decide how you want to have your account balances paid to you, either as a lump sum payment or in annual installments for 5, 10 or 15 years. The distribution election you choose for any source can change only once in the future. If you choose to use your one-time opportunity to change your distribution election after your initial election is made, then your payment will automatically begin five years and six months following separation from service. Elections to change must be made at least 12 months prior to the date you originally elected to receive payment of the account balance, and the form of payment must be deferred for at least five years after the original payment date.
- Deferral periods. Each year's deferrals for base pay and/or bonus can be treated differently in terms of the amount you elect to defer. This flexibility allows you to plan ahead for other forms of income, such as proceeds from stock.
- Investment options. A broad range of investment options is available. You may choose the same investment options for all sources of your own contributions or company deferrals, or choose different options for each source if you choose.
