Florida Deferred Comp

Is Florida Deferred Comp a Good Idea?

In a Florida deferred compensation plan, a portion of your pay as an employee will be held until a specified date, typically when you retire. Deferred compensation plans you may be eligible for in the Florida market depend on your employer and include a pension plan, employee stock options, and various retirement plans. Deferred compensation can be a good investment into your retirement because it helps you passively save for your retirement and provides you with a resource for major life events or hardships.

Can You Take Money Out of Your Deferred Compensation?

A qualified deferred compensation plan charges a 10 % penalty on withdrawals made before you are 59.5 years old. Many deferred compensation plans have special allowances for pre-retirement distributions, for such life events as buying a home, saving for a child’s education, or other long-term goals.

A deferred compensation plan is qualified when the services plan complies with Employee Retirement Income Security Act (ERISA), and includes 401(k) and 403(b) plans. Qualified plans are required to set limits on contribution and are open to any employee in the company. Qualified plans are more secure than non-qualified investment plans because they are held in a trust account.

Non-qualified compensation plans consist of written agreements between employer and employee that allows for a portion of the employee’s compensation to be held by the company, invested, and provided to the employee at a later date. There are no contribution limits and may not be available for all employees. The employer is able to keep the money as an investment within the business funds, which means your money is at risk if the company goes bankrupt.


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How do I Withdraw from a 457 Deferred Compensation Plan?

Many retirement plans for government agency employees are classified as a 457 deferred compensation plan. You can deposit pretax money into your retirement plan and accumulate your investment savings to use when you retire. You can withdraw money from you 457 investment early (before you are 59.5 years old) without being charge a 10% withdrawal penalty if you leave your employer or have a qualifying hardship (medical, funeral, natural disaster, or pending foreclosures). However, you would still be responsible for paying taxes on the money.


If you are uncertain about what the terms of your plan are or how to withdraw funds, it is a smart idea to speak with an investment services consultant or advisor to help answer your questions and discuss your options.

Florida Deferred Comp FAQs

How does a deferred compensation plan work?

  • Part of an employee’s paycheck is withheld until a later time, usually retirement. Pensions, retirement plans, and employee stock options are deferred compensation plans.


Is deferred compensation worth it?

  • Deferred compensation can help prepare for retirement. Additionally, there can be tax benefits by reducing one’s yearly salary to a lower tax bracket.


At what age can you withdraw from deferred compensation?

  • If you’re enrolled in a 457 plan, you can withdraw money when you retire, leave your job, or experience financial hardship. Mandatory withdrawal begins after age 70.

Have More Questions or Need Assistance?

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(352) 613-2915 | mikep@thepattonfinancialgroup.com