No. of Recommendations: 0
3) Deferred Comp - My job offers this program which essentially operates just like a 401k but the assets are not protected by the same regulations as the 401k. My understanding is if my company went bankrupt or something that any assets in Deferred Comp could be comprimised.


My husband has a deferred compensation plan. It has mutual funds with well known mutual fund companies for the investment choices. That seems safe to me. (I have NOT investigated this matter.) I'm pretty sure there is a Total Market Index fund as one of the choices.

It used to have company stock as a mandatory(?) option. That seems a lot riskier.

He had to make a one-time election to receive the money in a lump-sum or over 10 years when he separated from the company. He chose lump-sum because he thought the company might go bankrupt or something within the 10 years before he had all his compensation back and he didn't want to risk that. Now we feel silly about that choice because the company is Intel. But 28 years ago, who knew?

I suggest you look at the management fees on the investment choices available in the deferred compensation plan as well as your choices 1 & 2. Also compare the tax picture. Income taxes, Medicare & FICA, AMT. It's complicated, so you should play with the numbers until you get a feel for them. You also have to predict tax-law changes and your financial picture in the future. You might want to get help.

But if you procrastinate like I do, you could sign up for it while you are figuring it out. Especially if you can change your mind about contributing later.

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