US Legal Forms
Deferred Compensation Agreement - Long Form

Deferred Compensation Plan For Self Employed In Illinois

Category:

Employment - Compensation

State:

Multi-State

Control #:

US-00418BG

Format:

Instant download

Description

The Deferred Compensation Plan for Self Employed in Illinois is designed to provide a structured method for self-employed individuals to secure post-retirement income or death benefits for beneficiaries. This agreement outlines the terms under which a corporation may compensate an employee upon retirement or in the event of premature death. Key features of the form include defined retirement age, monthly payment amounts adjusted for inflation through the National Consumer Price Index, and stipulations around employment termination and non-competition. Users must fill in the corporation's details, the employee's role, compensation amounts, and applicable dates. This form is particularly useful for attorneys, partners, and corporate officers who need to establish clear agreements on deferred compensation, ensuring compliance with state laws. Legal assistants and paralegals may assist in drafting and reviewing these agreements to protect the interests of both parties. It serves as a crucial tool in retirement planning for self-employed individuals, helping them to manage financial security effectively.

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FAQ

Retirement withdrawals from pre-tax contributions and earnings are subject to federal income tax. The State of Illinois does not tax retirement income from the Deferred Compensation Plan if taken in ance with plan provisions, at full retirement age, as a legal resident of Illinois.

The normal contribution limit for elective deferrals to a 457 deferred compensation plan is $23,500. The annual elective deferral limit for 401(k) plan employee contributions is $23,500. The annual elective deferral limit for 403(b) plan employee contributions is $23,500.

The Deferred Retirement Option Plan, commonly known as DROP, is a retirement benefit that allows Tier 1 public safety members who are already eligible for retirement to continue working while collecting a salary and accumulating monthly pension benefits that will become available upon retirement.

Once distributions begin, the distributed monies are fully taxable as ordinary income for federal tax purposes. The funds are never taxed by the State of Illinois.