Deferred compensation refers to money received in a year for work done in a previous year, often many years earlier. You usually receive deferred compensation after you retire or leave employment. Deferred compensation is a compensation plan that allows employees to defer compensation earned in a tax year to a future tax year. Some parts of the payments and bonus payments, such as contributions to a Gold Roth IRA account, are some of the compensations that employees may choose to defer. Deferred compensation is not considered taxable income for employees until they receive the deferred payment in a future tax year.
Unlike a 401 (k) plan, when funds are received from a deferred compensation plan, they cannot be transferred to an IRA account.
