Ujnar24

(hope I posted this in the right section...)

I've attained a level at my company that allows me to participate in a Deferred Compensation program. I can defer salary or bonus earned in 2009 into this program.

It's difficult for me to determine the pros/cons or if this is really a benefit. Here is what I think I know about the program:

Pros:
1. tax-deferred $ would be available to invest in various instruments (company stock, various Fidelity funds, etc)

Cons:
1. cash flow would be reduced
2. investment options are limited
3. cash invested is not available until a certain age


Unknowns / questions:

1. If needed (not foreseen), could I take any of the deferred funds out (if so, is that with a penalty?) before official retirement age?

2. Isn't this in some way like an extension to a 401k account? It feels that way b/c $ go in untaxed and get invested until (I assume) a retirement age is reached.

3. If one assumes a higher tax bracket than what current bracket is, isn't the pro value above diminished?


I was told a week ago that I now qualify to make this decision for next year's salary or bonus. Unfortunately around the holidays I have very few people within my company to bounce advice from. I need to decide any contributions that I would like to make by next week (12/31). Once the decision is made, it is locked for the rest of 2009.

Any insight (other pros/cons/thoughts/your experiences with such programs) you could offer, would be greatly appreciated for this newbie to make a well informed decision!

Thank you in advance!