Nonqualified Deferral Plan

[Guest ChrisF]

I have 3 questions:

1. If the deferral is coming out of an annual bonus, is the contribution taxable?

2. If life insurance is the funding vehicle, the premium would equal the amount of the after-tax deferral contribution.

3. Is there any way to use the pre-tax amount of the deferral as the premium (ie; $50,000 bonus after-tax is a $30,000 contribution (40% tax bracket).)

Thanks!

[TCWalker]

I'll admit I don't understand the meaning of your last two questions. As to the first question, a properly made deferral of bonus compensation to a properly established nonqualified plan is not taxed as income to the deferring employee until constructively received, aside from FICA withholding.