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Payments from Deferred Comp Plan


Guest skc

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We have a Deferred Compensation Plan that we need to make payments from. Can we have the plan funds be transferred to the Company and make the payments through payroll?

If not how do we calculate and deposit withholding and fica/medicare taxes?

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If the payments are subject to withholding in the same manner as regular salary/wages, then using a payroll system as the payment tool seems to make sense. BTW, mind the FICA limit.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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On the other hand, if you are talking about transferring "plan funds", are the assets currently in a trust? If so, you may need to check the terms of the trust document on whether this is an option. Many trustees will take direction upon distrubution to remit withholding to the appropriate taxing authorities. The trust may also have a reimbursement clause to permit the company to seek reimbursement for payments made from corporate assets.

 - There are two types of people in the world: those who can extrapolate from incomplete data sets...

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