Abstract: The present invention provides a system and method for setting up an employee deferred income plan that may preferably be utilized for various purposes such as to delay taxation of the deferred amounts, to avoid inclusion of the deferred amounts in the income of the employer, to avoid the possibility that the employer's creditors can obtain the deferred amount, and to permit any percentage of the employees income to be deferred. The plan provides that a taxable employer has an agreement with a non-taxable entity regarding income due to the taxable employer from the non-taxable entity. Under the agreement, the non-taxable entity or an agent thereof will remit to an indemnification trust fund an amount equal to the employee's elected deferred amount in order to indemnify the taxable employer for the deferred amount which the taxable employer has promised to pay the employee upon the occurrence of a payable event.