Wednesday, September 19, 2007

Deferred Comp Plans - Legally Risky

Tax deferred "Deferred Compensation" plans present some opportunites and some very important risks to high-income employees. If you are offered a chance to participate in a deferred comp plan, make sure you are well aware of the RISKS inherent in the plans.

Critically, your retirement savings in Deferred Comp plans may not be safe from creditors in the event your company goes bankrupt.,0,5702591.story?coll=ny-sports-columnists

If you participate in a plan, I strongly recommend you know the financial risks faced by your employer. If you have any concerns, you need to consider an exit plan and/or hedging plan ASAP.

If exiting your job is not a realistic short-term strategy and your money is stuck, you might want to consider structuring an option that "pays" if you employer goes bankrupt. Just a thought.

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