A salary deferral agreement is a contractual arrangement between an employer and an employee that allows the employee to defer a portion of their salary to be paid out at a later date, often to take advantage of tax benefits or for retirement savings. This agreement outlines the terms, including the deferred amount, the method of deferral, and any conditions or timelines for payment.
Salary Deferral Agreement. “Salary Deferral Agreement” means a Deferral Agreement filed in accordance with the salary deferral program described in Article V.
All other provisions of his or her Salary Deferral Agreement shall remain in force and such Member shall continue to be a Member of the Plan.
An individual who first becomes an Eligible Executive on or after the first day of a calendar year may file a Salary Deferral Agreement with the Administrator within 30 days of the date such individual becomes an Eligible Executive, in such manner as the Administrator may prescribe. For the avoidance of doubt, individuals may only be designated by the Administrator and become Eligible Employees as of the first day of any calendar quarter in a Plan Year.
Salary Deferral Agreement. (a) A Member’s Salary Deferral Agreement shall authorize a specified amount as a reduction in his or her base pay with respect to such Member’s Salary Deferrals under the Plan. Salary reductions shall be in whole percentages not to exceed 75% percent. The Agreement shall be effective for the first payroll period beginning (i) in the calendar year for which it is effective; or (ii) in the case of a first-time Eligible Executive, effective as of the first day of the month following the date a Salary Deferral Agreement is filed with the Administrator in accordance with Section (b). (b) An Eligible Executive’s election under a Salary Deferral Agreement shall be effective on the last day such deferral election may be made under Section 5.01(a) or (b). A Salary Deferral Agreement once effective shall not be revoked or modified with respect to prior deferrals and shall remain in effect for subsequent calendar years until such time as the Member files a new Salary Deferral Agreement for a subsequent calendar year with the Administrator.
Amount and Compensation. A Participant’s Salary Deferral Contributions with respect to a Plan Year shall not be less than such amount the Employer prescribes in the Salary Deferral Agreement nor more than one hundred percent (100%) of the Participant’s Compensation (minus required payroll deductions and deductions for any other Employer-sponsored plan or program) or such other amount the Employer establishes in the Salary Deferral Agreement. A Salary Deferral Agreement shall be made (and/or limited) with respect to such Compensation prescribed by the Employer and set forth in one or more Salary Deferral Agreements.
The employee may enter into a salary deferral agreement at any time to select an alternative deferral amount or to elect not to defer in the plan.
Dr. Lopatin’s current annual base salary is $450,000, which is subject to review and modification, provided, however, that Dr. Lopatin entered into a salary deferral agreement with the Company pursuant to which a portion of Dr. Lopatin’s 2020 base salary was deferred until the earlier of March 15, 2021 or an Equity Financing as defined in the salary deferral agreement.
A participant elects under his salary deferral agreement whether the resulting deferred compensation will be distributed to him in annual installments or a lump sum payment upon separation.
The Company offers a retirement savings plan under Section 401(k) of the Internal Revenue Code to certain eligible salaried employees. Each employee may elect to enter a written salary deferral agreement under which a portion of such employee’s pre-tax earnings may be contributed to the plan.
All Participants. All existing Participants, regardless of any prior Salary Deferral Agreement.
The Company entered into a salary deferral agreement with various employees. Contingent upon the Company closing an institutional financing of at least USD25 million, the Company was to pay the employees a bonus of 20% of the deferred salary as of that date. Upon completion of the initial public offering on the TSX the Company paid the deferred salaries and associated bonus.
Prior to 2007. Prior to January 1, 2007, pursuant to a salary deferral agreement in force under the SIP and subject to the provisions hereof, any amount of contribution up to 6% of Compensation for a calendar year that is restricted under Section 401(a)(17), Section 402(g) or 415 of the Code shall be allocated to a Participant’s salary deferral account under the Plan.
"Salary Deferral Agreement" means an agreement between a Participant and the Employer, whereby the Participant elects to reduce Compensation by a specific dollar amount or percentage and the Employer agrees to contribute such amount into the 401(k) Plan. The election may be made electronically in a manner permitted by the Employer. A Salary Deferral Agreement may require that an election be stated in specific percentage increments (not greater than one percent (1%) increments) or in specific dollar amount increments (not greater than dollar increments that could exceed one percent (1%) of Compensation). A Salary Deferral Agreement may not be effective prior to the later of: (a) the date the Employee becomes a Participant; (b) the date the Participant agrees (including by automatic consent) to the Salary Deferral Agreement; or (c) the date the 401(k) plan is adopted by the Employer or applicable Participating Employer. A Salary Deferral Agreement is valid even though it is executed by an Employee before he or she actually becomes a Participant, so long as the Salary Deferral Agreement is not effective before the date the Employee becomes a Participant. A Salary Deferral Agreement may only apply to Compensation that becomes currently available to the Employee after the effective date of the Salary Deferral Agreement.
Salary Deferral Agreements and Deferral Elections. Each Participant in the Elective Deferral Component of the Plan may submit a Salary Deferral Agreement to the Administrator at any time authorizing the Employer to withhold all or a portion of the Participant’s Compensation as an Elective Deferral, subject to the following provisions:
Effective Date. A Participant’s Salary Deferral Agreement may be entered into as of such date or dates (but at least once per Plan Year) as established by the Administrator in an administrative policy. Salary Deferral Agreements will be effective as soon as administratively feasible after receipt thereof by the Administrator (unless a later pay period is specified by the Participant in the agreement) and will remain in effect until such time or times as established by the Administrator in an administrative policy (or until such time or times set forth in the Plan with respect to any automatic enrollment program that may be established under the terms of the Plan).
Modification, Suspension or Cancellation. A Participant may modify an existing Salary Deferral Agreement to increase or decrease the percentage or amount being withheld as permitted under an administrative policy. The Participant may also at any time suspend or cancel a Salary Deferral Agreement upon reasonable written notice to the Administrator, in which event, the Participant will not be permitted to file a new Salary Deferral Agreement until such time as set forth in the administrative policy. If necessary to insure that the Plan satisfies the ADP Test, or upon a Participant reaching the Elective Deferral limit of Code §402(g), the Employer may temporarily suspend a Participant’s Salary Deferral Agreement upon notice to the Participant.
A Salary Deferral Agreement is a formal arrangement between an employer and an employee, whereby a portion of the employee’s earnings is postponed or “deferred” to a future date. This arrangement is often part of a retirement savings or investment plan, allowing employees to contribute pre-tax income towards future financial goals. Commonly associated with retirement accounts like 401(k) plans in the U.S., salary deferral can help employees save for their future while potentially reducing their current taxable income.
You should consider using a Salary Deferral Agreement when:
When writing a Salary Deferral Agreement, consider the following elements:
Example:
“The Employee agrees to defer 5% of their monthly salary into the Company’s 401(k) plan starting January 1, 2024. The deferred amount will be deducted from the Employee’s gross salary before taxation and invested according to the Employee’s selected investment options within the plan. The arrangement will continue unless modified by mutual consent or the Employee opts out, with appropriate notice given.”
Salary Deferral Agreements are typically found in:
Typically, these contracts will provide a comprehensive framework that aligns with both employer policies and legal requirements.
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