I am leaving a family business (but not retired) and I have a non-qualified deferred compensation plan with them. They are giving me all the employer and employee vested amounts. What is the best advice for the distributions which will be soon? I understand that the distributions will be subject to ordinary income tax (federal and state) and any other taxes? This will leave me with about less than half of the proceeds after taxes. Can I roll-over any of the amounts(tax -free) and how best to invest the proceeds? Thank you.
Unfortunately, you cannot roll the nonqualified funds over to any other tax-deferred retirement plans. How to invest the proceeds depends on your financial goals and objectives, age, risk tolerance level, any other types of investments you have, and the amount of the proceeds relative to your total financial assets. If you are in your 50s or older, and consistent with your risk tolerance and other investments you may want to consider a balanced investment portfolio (50% stocks and 50% fixed-income). Your stock investments could be diversified among large, midcap, smallcap, and international companies and obtained through individual stocks and/or mutual funds. Your bond investments could be diversified among goverment agencies, corporates, municipals, high yield, and international with laddered maturities out to about 20 years. These could be invested in individual securities and/or mutual funds.
EA, CEBS - 32 years experience providing financial advice