Is Deferred Compensation A Retirement Plan? 
A deferred compensation plan is an arrangement created between the employer and the employee to delay portions of their salary and/or bonus until a future date , generally retirement . The employer can deduct the deferred salary when it 's distributed at the arranged date . The employee then takes the deferred compensation as ordinary income and pays taxes at their effective tax bracket rate . So in effect , it is a type of retirement plan . 