Which statement about deferred compensation plans is correct?

The statement that deferred compensation plans allow executives to delay receiving current compensation until a future time is accurate. These plans are specifically designed to enable employees, often in higher income brackets such as executives, to defer a portion of their income to be received at a later date, usually after they retire or leave the company. This can provide tax benefits, as the income is not taxed until it is paid out, potentially lowering the tax burden in the years when the income is deferred.

This characteristic is particularly appealing to individuals who may want to manage their taxable income more effectively or who are planning for retirement by saving additional funds that can grow over time. The deferred payments may take various forms, including cash or investments, but the core principle is the ability to postpone income.

In contrast, some other options are inaccurate for deferred compensation plans. While they may be non-qualified plans, stating this alone doesn't capture the main functionality of deferral or the audience they typically serve. Also, not all employees are required to participate—these plans are often elective and aimed at select employees, not mandatory for all individuals over 18. Finally, while stocks can be part of the funding vehicles for some plans, they are not necessarily the primary means; various funding options exist, and cash