deferred compensation

Definition

An arrangement in which a portion of an employee's income is paid out at a date after which that income is actually earned. Examples of deferred compensation include pensions, retirement plans, and stock options. The primary benefit of most deferred compensation is the deferral of tax.

Use this term in a sentence

I opted for deferred compensation when I decided to put some of each of my paychecks into a Roth IRA every month.

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I did not want any deferred compensation because in the pat I had never gotten it at all and that made me mad.

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You may need to offer some deferred compensation if you will not be able to pay an employee until the profits come in.

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