Short-Term Deferral Day is Right Around the Corner

Section 409A, the provision of the Internal Revenue Code that regulates the time and form of payment of nonqualified deferred compensation, contains a helpful exception for “short-term deferrals.”  Specifically, Section 409A provides that a payment will not be considered nonqualified deferred compensation if the employer makes the payment on or prior to the 15th day of the third month following the end of the employee’s (or, if later, the employer’s) taxable year in which the employee’s right to the payment vests.  For individuals and for employers with calendar fiscal years, the key date for purposes of the short-term deferral exception is March 15th (a little less than two weeks from today). Read More ›

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Don’t Miss Short-Term Deferral Day

Section 409A, the provision of the Internal Revenue Code that regulates the time and form of payment of nonqualified deferred compensation, contains a helpful exception for “short-term deferrals.”  Specifically, Section 409A provides that a payment will not be considered nonqualified deferred compensation if the employer makes the payment on or prior to the 15th day of the third month following the end of the employee’s (or, if later, the employer’s) taxable year in which the employee’s right to the payment vests.  For individuals and for employers with calendar fiscal years, the key date for purposes of the short-term deferral exception is March 15th. Read More ›

Posted in Employee Benefits, Executive Compensation | Tagged , , , , , ,

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Don’t Miss Short-Term Deferral Day

As some of you know, Section 409A of the Code contains a very helpful exception for “short-term deferrals.”  More specifically, Section 409A provides that a payment will not be considered “nonqualified deferred compensation” if the employer makes payment to the employee no later than the 15th day of the third month following the end of the employer’s (or, if later, the employee’s) taxable year in which the employee’s right to the payment vests.

Most employer’s annual incentive programs are structured (or could be structured) to qualify for the short-term deferral exception to Section 409A.  If an employer’s fiscal year is the calendar year, this means that 2013 annual incentive payments that are intended to qualify for the short-term deferral exception must be paid by March 15, 2014. Read More ›

Posted in Employee Benefits, Executive Compensation | Tagged , , ,

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