Course: Retirement Planning
Lesson 8: Fitting Deferred Compensation into the Retirement Plan
Curious as to why the net result is $525,000.00 and not $500,000.00. Wouldn’t 100% of her current year compensation be $500,000.00? Is it just that the Board decided to max out the limits of the DBP and the NQEBP so that’s where the $525,000.00 figure came from?
Great to hear from you. So, yes – as you allude to, they are attempting to max out the benefit. So, how do we arrive at $525,000? It would be the $225,000 as the maximum benefit payable from the qualified defined benefit plan plus the $300,000 from the nonqualified excess benefit plan. That gives us the maximum benefit of $525,000.
Let me know if you have any further questions!