As reported in Part 3 of our 2014 End of Year Plan Sponsor “To Do” List, employers that sponsor deferred compensation programs should take action to ensure that deferral elections that apply to compensation that will be earned in 2015 are made by December 31, 2014. As a general rule, Section 409A requires that compensation deferrals under a nonqualified deferred compensation program be made during the taxable year before the year in which the underlying services are performed. There are some exceptions to this general rule, but employers should be mindful that Section 409A imposes strict requirements on the timing of compensation deferral elections and that most deferrals of 2015 compensation must be made on or before December 31, 2014.
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