These are separation from service, a specified date the participant has chosen, disability, death and change of control. Fogleman adds that the first, third and fifth have specialized definitions. Amounts can also be paid in an unforeseeable emergency, which he says is like a hardship withdrawal in a qualified retirement plan, but much stricter. Mort and Gaknoki say the time of payment generally may not be accelerated and may not be further postponed except under limited circumstances.
In that case, payment generally must be delayed for a period of six-months from the separation from service or, if earlier, until the death of the employee. Payments may be made in lump-sums or installments. They add that there are three situations when employers can pay out deferrals immediately: When it ceases providing a certain category of NQDC plans altogether and the employer terminates all such plans with respect to all participants; during the 30 days preceding or 12 months following a change in control of a corporation but only if all substantially similar arrangements of the employer are terminated ; and in the case of certain corporate dissolutions or with the approval of a bankruptcy court.
Section A covers a broad range of arrangements not typically regarded as providing for a deferral of compensation. For example, the following may all be nonqualified deferred compensation subject to Section A:. Severance payable under an employment agreement. For each taxable year that assets treated as transferred under this subsection remain set aside in a trust or other arrangement subject to paragraph 1 , 2 , or 3 , any increase in value in, or earnings with respect to, such assets shall be treated as an additional transfer of property under this subsection to the extent not previously included in income.
For purposes of subparagraph A , the interest determined under this subparagraph for any taxable year is the amount of interest at the underpayment rate plus 1 percentage point on the underpayments that would have occurred had the amounts so required to be included in gross income by paragraph 1 , 2 , or 3 been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such amounts are not subject to a substantial risk of forfeiture.
Nothing in this section shall be construed to prevent the inclusion of amounts in gross income under any other provision of this chapter or any other rule of law earlier than the time provided in this section. Any amount included in gross income under this section shall not be required to be included in gross income under any other provision of this chapter or any other rule of law later than the time provided in this section.
References to deferred compensation shall be treated as including references to income whether actual or notional attributable to such compensation or such income. Except as provided by the Secretary, rules similar to the rules of subsections b and c of section shall apply.
Section 16 a of the Securities Exchange Act of , referred to in subsec. A prior section A was renumbered section of this title. Former par. Amendment by Pub. Please help us improve our site! No thank you. Email Disclaimer. Please note that unsolicited emails and attached information sent to McGuireWoods or a firm attorney via this website do not create an attorney-client relationship. If you are not a McGuireWoods client, do not send us any confidential information. We may not respond to unsolicited emails and do not consider them or attached information confidential.
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