Did You Get Hammered at Tax Time? Do You Need a New Strategy for Pre-Tax Deferral?
This article, Advantages to Pre-Tax Deferral of Income in an Uncertain Tax Environment, looks at some of the ways current thinking is being challenged on the topic of income deferral.
“Employees who once routinely deferred compensation are now rethinking those habits as they consider updates to their financial plans. Among the concerns is whether it might be better to take income today because of the uncertainty of tax increases in the future.
The uncertainty was highlighted in the 2012 “fiscal cliff” negotiations in which the top Federal tax rates were increased and a number of “revenue enhancements” were added, which are nothing more than new taxes under the proverbial sheep’s clothing. This article shows how you should consider recent and future tax rate changes and investment returns when analyzing whether to participate in your company’s nonqualified deferred compensation plan (DCP).”