Typically, the longer the deferment the better because the assets can grow within the plan untaxed. So even if someone is 60, and they don't plan to touch the money for another ten years, deferring could be better. For example, assuming a 6% investment earnings rate, someone in a 40% tax bracket now and a 45% bracket at retirement should not defer if the time frame for this is just five years-a post-tax investment would have done better, Frederick says. But if the time frame is ten or 15 years, deferring works to the investor's advantage.
Executives also need to be sure they won't need the money. Unlike 401(k) assets, an investor can't pay a tax penalty and get access to a deferred bonus. It's locked up until distribution.
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