Ask Terry Questions Qualified and Non Qualified Pension Plans

Qualified and Non Qualified Pension Plans

By Terry Savage on July 05, 2020 | Financial Planning / Retirement

Why are payroll taxes due on a Non Qualified Pension Plan

Terry Says

A “non-qualified” plan is typically a “deferred income plan” — so when you withdraw in the future, you owe all the taxes that would have been paid at the time.
Each plan has its own requirements for withdrawals — and some restrict you from withdrawing until you leave the company or retire.
Here’s something to think about: If taxes go UP in the future, you could find yourself paying more in income taxes on this deferred comp. That will depend on the election results, of course. But if you’re thinking that is a possibility, and if you are allowed to withdraw some or all of the deferred comp this year, you might want to pay the taxes now — before (or should I say IF) you anticipate rising rates.

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