Articles Discussing Executive Deferred Compensation

Businesses often consider how to reward and retain top talent and incentivize productivity without offering equity, an ownership interest in the business.  An executive deferred compensation plan allows an employer to supplement an executive’s base salary over a longer horizon—either after retirement or over a period of years.   We have outlined three different options below, all of which are intended to reward executives based on productivity and results and to retain those executives by structuring a payout over time. 

The Internal Revenue Service recently issued proposed regulations under Section 457 of the Internal Revenue Code (the “Code”) that prescribe rules regarding deferred compensation plans sponsored by state and local governments and tax-exempt organizations. These regulations relate primarily to the taxes imposed (under Code Section 457(f)) on the organization at the time the individual’s right to compensation vests, without regard to actual time of payment.

Executive Summary: At the American Bar Association Section of Taxation 2014 May Meeting, an IRS official announced that the IRS has created a compliance initiative project (CIP) for Section 409A of the Internal Revenue Code (IRC). As part of the CIP, the IRS will review the deferred compensation plans of selected employers to evaluate their compliance with Section 409A requirements.