Salary Deferral Agreement: Definition, Terms, Example
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What is a Salary Deferral Agreement?
A salary deferral agreement is a formal, written contract between an employer and employee that outlines the terms of how much money will be withheld from the employee's paycheck to contribute to a retirement plan. This allows employees to save for their future without having to access their cash flow during their working years.
While this may seem like another financial burden on top of an already hectic schedule, not taking advantage of these opportunities can cost more in the long run. An employee should also consider what happens if they are laid off or fired before they retire. Deferring an employee’s salary with a salary deferral agreement ensures that the employee has some savings set aside no matter what.
Common Sections in Salary Deferral Agreements
Below is a list of common sections included in Salary Deferral Agreements. These sections are linked to the below sample agreement for you to explore.
Salary Deferral Agreement Sample
Exhibit 10.4.2
GEOVAX, INC.
SALARY DEFERRAL AGREEMENT
This Salary Deferral Agreement (the “Agreement”) is entered into as of July 1, 2017 by and between GeoVax, Inc., a Georgia Corporation (the “Company”), and Farshad Guirakhoo (the “Employee”).
Whereas, the Company and Employee recognize that it is in the best interests of the Company, its shareholders, and its collective Employees to conserve the Company’s cash resources; and as part of its cash conservation measures, the Company has asked certain of its employees to accept salary reductions and/or deferrals; and
Whereas, the Company and Employee acknowledge that this Agreement has been entered into for the express purpose of conserving the Company’s cash resources and not for executive compensation tax planning purposes, and
Whereas, Employee currently is currently earning an annualized gross salary of $250,000 (“Base Salary”);
Now, therefore, the parties hereby agree as follows:
|
1. |
Salary Deferral. |
| Effective July 1, 2017, Employee agrees to accept a deferral of 25% of his Base Salary, which amount will be accrued and paid to Employee as described below. |
|
2. |
Discontinuance of Salary Reduction and/or Deferral |
| Employee’s Salary Deferral pursuant to this Agreement shall end upon the occurrence of a significant event (to include financing, corporate partnership, etc., as determined solely by the Company) (the “Discontinuance Date”). |
|
3. |
Payment of Accumulated Deferred Salary. |
| At the Discontinuance Date, the Company in its sole discretion will determine the form of payment to be made to Employee for the accumulated Deferred Salary. Such payment may be made in cash, in the form of Company Stock, or in a combination of cash and stock. |
ACCEPTANCE
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Employee |
Date |
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Agreed: |
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GeoVax, Inc. |
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By: |
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Reference:
Security Exchange Commission - Edgar Database, EX-10.42 8 ex_107983.htm EXHIBIT 10.4.2, Viewed December 14, 2021, View Source on SEC.
Who Helps With Salary Deferral Agreements?
Lawyers with backgrounds working on salary deferral agreements work with clients to help. Do you need help with a salary deferral agreement?
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Meet some of our Salary Deferral Agreement Lawyers
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Ferraro Law Firm was founded by Dean C. Ferraro. Dean earned his Bachelor's Degree from California State Polytechnic University, Pomona ("Cal Poly Pomona") in 1992 and his J.D. Degree from the University of Mississippi School of Law ("Ole Miss") in 1996. He is licensed to practice law in the State Courts of Colorado, Tennessee, and California. Dean is also admitted to practice before the United States District Courts of Colorado (District of Colorado), California (Central District), and Tennessee (Eastern District). Shortly after earning his law license and working for a private law firm, Dean joined the District Attorney's office, where he worked for five successful years as one of the leading prosecuting attorneys in the State of Tennessee. After seven years of practicing law in Tennessee, Dean moved back to his birth state and practiced law in California from 2003-2015. In 2015, Dean moved with his family to Colorado, practicing law in beautiful Castle Rock, where he is recognized as a highly-effective attorney, well-versed in many areas of law. Dean's career has entailed practicing multiple areas of law, including civil litigation with a large law firm, prosecuting criminal cases as an Assistant District Attorney, In-House Counsel for Safeco Insurance, and as the founding member of an online law group that helped thousands of people get affordable legal services. Pursuing his passion for helping others, Dean now utilizes his legal and entrepreneurial experience to help his clients in their personal and business lives. Dean is also a bestselling author of two legal thrillers, Murder in Santa Barbara and Murder in Vail. He currently is working on his next legal thriller, The Grove Conspiracy, set to be published in 2023.
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