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Next January (2014), I will receive a large deferred income distribution from a SERP, top hat plan. Are there any ways to minimize the tax obligations?


The BIDaWIZ Team's Answer:

SERP (top hat plans) are considered non-qualified deferred compensation plans. They lack the characteristics of qualified retirement plans in that they cannot be rolled into individual retirement accounts and 529 plans. It's possible to request that your employer spread the payment over time, thus reducing your tax bill and any increase to your modified adjusted gross income for the year. The only issue is that you are technically liable for the distribution you are entitled to with the plan. The wording in the plan would need to support a payment over time for you to benefit from this tax planning strategy.

The BIDaWIZ Team



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