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🇺🇸 US · US tax

Deferred compensation

Also called: deferred comp

In one line

Pay you earn now but receive later, which US Section 409A regulates tightly — including some forms of equity.

In plain English

Deferred comp is money promised today but paid in the future. Because under-priced options count, Section 409A rules apply, which is why valuations and strike prices are handled carefully.

If you were explaining it to a 5-year-old

Pocket money you've earned but won't get until later — and there are strict rules about how it's handled.

Why it matters when you sell

Equity that counts as deferred comp carries 409A rules that shaped your grant and affect its tax treatment at sale.

Related terms

Section 409A (tax code)409A valuationOrdinary income (equity)Strike price

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Sources

Primary references for this term: IRS (US tax). Our definitions are written in plain English and kept evergreen — see the glossary methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.