I don’t really see this as a loophole. Deferred comp plans aren’t unusual and are tax planning vehicles. Makes sense when dealing with retirement contracts. What’s strange is that neither apply here, so he gets little benefit from deferring his comp. If his income is lower in year 9 because he’s no longer playing hockey, and if he moves to a lower tax state, it’s a tax win. Agreeing on the right investment strategy for the deferred comp plan shouldn’t be that hard either, lots of organizations do this.
And the cap hit is simply the money that gets put into the plan.
|