Search results
Results from the WOW.Com Content Network
The effects of Section 409A are far-reaching, because of the exceptionally broad definition of "deferral of compensation." Section 409A was enacted, in part, in response to the practice of Enron executives accelerating the payments under their deferred compensation plans in order to access the money before the company went bankrupt, and also in ...
However, they are required to meet the requirements of IRC § 409A. [citation needed] Deferred: the employee's receipt of compensation is delayed until a future date (such as upon attaining normal retirement age). Compensation: the employee can defer regular salary, bonuses or any other type of compensation.
Both qualified and non-qualified deferred compensation plans can have vesting periods. Qualified plans are required to have vesting periods. Non-qualified plans are not, but occasionally do.
Deferred compensation is a written agreement between an employer and an employee where the employee voluntarily agrees to have part of their compensation withheld by the company, invested on their behalf, and given to them at some pre-specified point in the future.
Incentive stock options (ISOs) are only available for employees and other restrictions apply for them. For regular tax purposes, incentive stock options have the advantage that no income is reported when the option is exercised and, if certain requirements are met, the entire gain when the stock is sold is taxed as long-term capital gains.
In essence, contributions to tax-deferred accounts such as a traditional IRA or traditional 401(k) allow you to postpone paying taxes until you begin making withdrawals. At that point, the ...
Deferred compensation plans in the US often have the benefit of employers' matching all or part of the employee contribution. In the US, Internal Revenue Code section 409A regulates the treatment for federal income tax purposes of “nonqualified deferred compensation”, the timing of deferral elections and of distributions. [26]
In 2004, Congress passed a tax act that added Section 409A to the tax code and applies to deferred nonqualified compensation, which also covers some 457(f) plans. This was in response to the executive bonus plans given to key employees at Enron , which allowed them early access to their deferred compensation if financial conditions of the ...