Question

Which of the following statements regarding deferred compensation plans is CORRECT?

A) Life insurance is not a permissible funding vehicle, but annuities are.
B) A deferred compensation plan must be made available to all employees who are at least 21 years old and have 1 year of service to the business.
C) They permit a business to provide extra benefits to officers, executives, and other highly paid employees.
D) A deferred compensation plan must always be designed as a qualified plan.

Answer 1

Deferred compensation plans permit a business to provide extra benefits to officers, executives, and other highly paid employees.Contrary to the idea that life insurance cannot be used, it can indeed be a permissible funding vehicle, and such plans do not need to be made available under the law to all employees nor do they have to always be qualified plans.

Step-by-step explanation:

The correct statement regarding deferred compensation plans is:

C) They permit a business to provide extra benefits to officers, executives, and other highly paid employees.

Deferred compensation plans are a form of executive compensation that allow a company to offer additional benefits to key employees. These plans often include stock options, bonuses, and other incentives that are not available to regular employees. By offering deferred compensation plans, businesses can attract and retain top talent.