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Jobs Act significantly impacts nonqualified deferred comp plans.

What would your employees say if they had to pay an additional 20% tax on their non-qualified deferred compensation?

The American Jobs Creation Act, signed into law by President Bush on Oct. 22, 2004, has substantial rulings relating to non-qualified deferred compensation plans (IRS Code Section 409A). Noncompliance can result in immediate taxation and substantial penalties. So, it is important for plan sponsors to review compensation arrangements and determine which ones fall under the reaches of this legislation, as most employers will need to make major revisions to

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    • HEADNOTE How the American Jobs Creation Act Redefines Deferred Compensation IMAGE ILLUSTRATION 1 The provisions of Sec. 409A of the American Jobs Creation Act of 2004 made sweeping changes to what qualifies as deferred compensation-a critical distinction that impacts 2005 federal tax returns. The legislation is already in effect for ......
  • New Section 409A: A Revolution in the World of Deferred Compensation
    • I. Introduction On October 22, 2004, President Bush signed into law the American Jobs Creation Act of 2004. The Act added section 409A to the Internal Revenue Code, which governs the taxation of nonqualified deferred compensation plans. The new provision will significantly limit how and when participants are able to ......
  • New section 409A: a revolution in the world of deferred compensation.
    • I. Introduction On October 22, 2004, President Bush signed into law the American Jobs Creation Act of 2004. The Act added section 409A to the Internal Revenue Code, which governs the taxation of nonqualified deferred compensation plans. The new provision will significantly limit how and when participants are able to ......
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    • HEADNOTE Selected Highlights IMAGE ILLUSTRATION 1 The following are selected highlights a of the 2004 American Jobs Creation Act, signed into law Oct. 22. Extraterritorial Income (ETI) Exclusion Repealed The Act repeals the ETI exclusion for post-2004 transactions, subject to 2005 and 2006 transaction relief (see Box 1) and grandfather ......
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    • The American Jobs Creation Act of 2004 (1) (AJCA), enacted on Oct. 22, 2004, probably contains the most far-reaching set of tax law changes since the Tax Reform Act of 1986. Its cost is revenue scored at $139 billion. This article focuses on the AJCA changes that affect domestic businesses ......
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  • Consider SARs Instead of Stock Options
    • Regarding Stock Appreciation Rights (SARs)--a non-stock compensation award that gives an employee cash equal to the appreciation in a company's share price over a period of time. "Some companies want to reward certain employees without the attendant ownership that stock entails or because they are not in a position to ......
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