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  #21  
Old 03-06-2019, 10:14 AM
C8 Guy C8 Guy is offline
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When you retire and start taking distributions, will SS and Medicare taxes be applied?
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  #22  
Old 03-07-2019, 09:16 AM
MathGeek92 MathGeek92 is offline
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no FICA tax
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  #23  
Old 03-07-2019, 10:16 AM
C8 Guy C8 Guy is offline
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no FICA tax
Yep, I see that FICA is still taken at the time of deferral. Therefore, not applied again when distributed.
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  #24  
Old 03-07-2019, 10:25 AM
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Pretty sure you have to be a HCE to qualify.
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  #25  
Old 09-04-2019, 12:29 PM
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Bump. I enrolled at $20k/year starting in 2020, investing it all in the S&P index fund. Payout starting in 2028, which is about when I'm hoping to retire or scale back a lot on work. Payout over a 5-year span, so the 2020 funds will get paid out 2028-2032, and so on. Should give me a nice laddered income stream that will bridge a good chunk of the gap between retiring and SS.

Most of the $20k is coming out of my bonus, and was already money I'd planned on saving, I'm not trying to save another $20k here, btw.

Fingers crossed!
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Old 09-04-2019, 10:16 PM
ActuarialFun ActuarialFun is offline
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Bump. I enrolled at $20k/year starting in 2020, investing it all in the S&P index fund. Payout starting in 2028, which is about when I'm hoping to retire or scale back a lot on work. Payout over a 5-year span, so the 2020 funds will get paid out 2028-2032, and so on. Should give me a nice laddered income stream that will bridge a good chunk of the gap between retiring and SS.

Most of the $20k is coming out of my bonus, and was already money I'd planned on saving, I'm not trying to save another $20k here, btw.

Fingers crossed!
Good luck! Not to scare you, but I'm a little afraid what individual income tax rates will look like at that time compared to now. But, if you expect to be working less, you'll be in a lower tax bracket. Hope it works out in your favor!
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  #27  
Old 09-05-2019, 12:14 AM
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Good luck! Not to scare you, but I'm a little afraid what individual income tax rates will look like at that time compared to now. But, if you expect to be working less, you'll be in a lower tax bracket. Hope it works out in your favor!
Risk is opportunity! Seriously, I agree with you, itís a substantial risk. But we will move down a bracket if/when this works out. And if tax rates inch up but donít go too high then Iím still ahead. On balance I decided it was worth taking the risk.
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  #28  
Old 09-05-2019, 07:45 AM
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remember you get to use the full tax graduated rates. I assume you're deferring in the 25% or higher marginal bracket. If when this is paid out to you, you have minimal other earned income, its seem very unlikely that you would pay 25% marginal tax rates.

24 K (assuming your married) is tax free
the 10% and 12% tax brackets up to like 78 K or something

these type of arrangements are perfect for bridging to retirement age (SS age) and retiring early
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  #29  
Old 09-21-2019, 01:34 PM
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My dad is evaluating an NQDC plan as well. He's wondering if there's a way to hedge the risk of the company failing in the future. The company is a well-known/established engineering company that's been around for 40+ years and Fortune 500. There's an A3 credit rating given by Moody's. He's also looking at an 8-10 year retirement horizon.

Online we saw that there's an option to buy a CDS against company bonds, but the transaction fees seem high and given that CDS are primarily meant for institutions and not individuals, it's a more complicated process overall.

https://www.coastalbridgeadvisors.co...-default-swap/

I have been having trouble finding any other options and was wondering if anyone else had possible ideas.
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