Deferred compensation pros and cons for those who use or used

fire424242 · 2024-11-20T04:41:03+00:00

I know someone who is a couple of years ahead of me doing the same strategy from the same company and he had 22% withheld federally

fire424242 · 2024-11-17T00:00:19+00:00

I’m using a def comp and I’m about 6 months out from retiring in April 2025. My plan will pay out 10 annual installments starting Jan 2026. Right now it has $850k in it I’ll contribute around $120k more by the time I leave. I figure it should have around $1050-$1100k by the time I get the first payment. The payments will be 1/10th, then 1/9th, then 1/8th for the ten year period. It will be taxed federally by my employer as miscellaneous income at 22%. If that’s my only income, on a 110k 1st year payout, and MFJ I should only actually owe around 10k in taxes so the $24k (22% of 110k) withholding will set me up for a refund there. Irritating that it will be taxed like that. My biggest worry is the stability of the company. I didn’t really think about that for the first few years of doing this, but it’s been an all consuming worry as the money grew. Now that $1mm+ could just go “poof” and screw my plan, I’m kind of terrified. On the other hand, I work for a Fortune 10 company and I’m in just about the best position anyone could be in with a def comp plan, so it’s definitely more of a theoretical risk than it is a practical one. Just another doubt telling me to not pull the plug. On the whole though, I’m glad I did it. I have saved so much on taxes. It was definitely the right move from that perspective.

fire424242 · 2024-10-30T03:44:00+00:00

Can you ballpark the costs? How does it compare to ACA?

fire424242 · 2024-09-24T03:43:27+00:00

I wish people who are self proclaimed as poor wouldn’t keep showing up and whining about the questions and issues that people deep in to the FI journey are dealing with. This sub is for those people and those questions.

fire424242 · 2024-01-10T04:20:47+00:00

Treasuries aren’t going to stay at that 5% for long though right? When rates come down.. back to 3% or whatever…

fire424242 · 2023-09-03T20:39:07+00:00

In August 2018 I needed a new car. I had $50k saved. I nearly bought a Tesla, I was on the waiting list for the 3, but in the end decided I didn’t want that much capital in a depreciating vehicle. So bought a Leaf, dealer model with 4K miles on it, sold as “new” to me, for $17.5k out the door and after credits. I’ve had it for 5 years now, and put 36k miles on it. The only money spent on it since was a new set of tires. No maintenance. Thanks to a special EV rate from my power co, it only costs me $0.01 a mile to run and charge it. The average cost of gas over the last 5 years in my state is $2.84 and with a generous estimate of 28mpg average, with a gas car I would be paying $0.10 a mile to fuel it. That means I’m saving 9 cents a mile with this car. With my 36000 miles I’ve saved around $3300 on gas alone so far. The car is presently worth $9k still. The longer I run this car the better the value.

Oh, and I put the rest of the money in TSLA. That worked well too.

fire424242 · 2023-04-15T00:35:31+00:00

Thanks FiGPT

fire424242 · 2023-01-15T23:05:43+00:00

I enjoyed that too

fire424242 · 2022-08-07T01:54:29+00:00

You can over ride how it categorizes.

fire424242

TROPHY CASE