Non Qualified Plan

What is the best way to include distributions from non-qualified deferred compensation plans in order to properly reflect taxes?


dan royer's picture

I would probably just use a series of special receipts using taxable as ordinary income. Just be careful to enter it as nominal instead of real or today's dollars since I assume your calculated annual benefit reveals just nominal dollars (not inflation-adjusted dollars).

The root of my question concerns proper FIT, FICA, Medicare and state tax handling. When I deferred this income 10 yr ago, it was excluded from my W-2, and no FIT or state taxes were paid, but FICA and Medicare taxes were paid. When I receive a distribution of this income in the future, FIT and state taxes will be due, but no FICA and Medicare.

If I schedule this as taxable future special receipts, will ESPlanner charge FICA taxes against it, and include these future receipts to determine my future social security benefit?

My bad for not making my issue clearer.

dan royer's picture

I was assuming that FICA had already been paid, so the taxable special-receipt will only address the federal and state income tax. In order to address FICA you'd have to enter it as self-employment income. So, no, as a special receipt FICA tax will not be applied.