Letter: Deferred payout similar to 401(k)



Regarding the July 1 Columbian story “Late WSUV chancellor topped 2011 public salaries,” one very important fact was omitted. The story reported that the late Hal Dengerink of WSUV “received a deferred compensation package and was paid a total last year of $363,075.” It also noted (former)Port of Vancouver Director Larry Paulson’s deferred compensation package: “In 2010, he received two years’ worth of deferred compensation payouts, while in 2011, he received one year’s worth.” Deferred compensation plans are like a 401(k). The money that goes into these investment programs comes out of the employee’s wages, not from the employer. The payroll deduction is made before taxes and the account is managed by the owner (employee).

Do not confuse this with not paying taxes on that money. The taxes are merely “deferred” until the money is withdrawn … presumably after the employee is retired. In essence, a deferred compensation plan is a personal savings plan that is entirely controlled by the employee and is inaccessible (except in extreme circumstances) until the employee ceases working at that establishment. It should not be considered some extra form of compensation because it is not.

Sandra Edmonson