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CHAPTER 9
UNFUNDED NONQUALIFIED RETIREMENT PLANS
§ 9.01 Overview of Taxation of Plan Participants
-----[1] Taxation of Plan Payments
-----[2] Payments Under Certain Government and Tax-Exempt Organization Plans
-----[3] The Use of “Rabbi Trusts.”
-----[4] Harsh Treatment of Certain Premature or Delayed Payments
-----[5] Harsh Treatment of Certain Conditional Funding of Deferrals
§ 9.02 General Attributes of Unfunded Nonqualified Plans
-----[1] Unfunded Nonqualified Plans Described
-----[2] Taxation of Payments Received Under Unfunded Nonqualified Plans
-----[3] Conditionally Funded Nonqualified Plans (Rabbi Trusts)
-----[4] Grants of Stock Options or Stock Appreciation Rights to Employees
-----[5] Payments Under Plans of State or Local Governments and Tax-Exempt Entities
-----[6] State Community Property Laws
§ 9.03 Date Payments May Begin Under Section 409A
-----[1] Section 409A in General
-----[2] Deferred Compensation and Exclusions
----------[a] Deferred Compensation Defined
----------[b] Regular Payroll Payments
----------[c] Short-Term Deferrals
----------[d] Indemnification and Liability Insurance
----------[e] Certain Legal Settlements
----------[f] Separation Pay Plans
---------------[i] Exceptions for Compensation Conditioned on Separation from Service
---------------[ii] Separation Pay as a Short-Term Deferral
----------[g] Excluded Stock Rights
---------------[i] When Stock Rights Are Exluded from Definition of Deferred Compensation
---------------[ii] Exclusion of Nonstatutory Stock Options
---------------[iii] Exclusion of Stock Appreciation Rights
---------------[iv] Common Stock and Other Equity Interests
---------------[v] Modifications and Extensions
---------------[vi] Rights to Dividends
---------------[vii] Stock Rights Qualifying as Short-Term Deferrals
---------------[viii] Failure to Satisfy the Exclusion
----------[h] Restricted Property, Including Trust or Annuity Plans
----------[i] Recurring Part-Year Compensation
-----[3] Initial Deferral Elections
-----[4] Payment Dates or Events
----------[a] Payment of Deferred Compensation on Specified Dates or Events
----------[b] Specific Time or Fixed Schedule
----------[c] The Retiree’s Separation from Service
----------[d] The Retiree’s Death
----------[e] An Unforeseeable Emergency
----------[f] The Retiree’s Disability
----------[g] A Change in Employer Control
----------[h] Alternative Permissible Dates or Events
----------[i] Disputes and Refusals to Pay
----------[j] Earnings on Deferred Compensation
-----[5] Payment Dates and Allowable Deviations
----------[a] Allowable Times and Forms of Payment
----------[b] Allowable Deviations from Plan Payment Dates
----------[c] Other Permitted Delays of Payments
----------[d] Changes in Time or Form of Payment
----------[e] Subsequent Deferral Elections Involving Life Annuities
---------------[i] Allowable Non-Complying Elections
---------------[ii] 409A Definition of Life Annuity
----------[f] Subsequent Deferral Elections Involving Installment Payments
----------[g] Elections Affecting Short-Term Deferrals
----------[h] Domestic Relations Orders
----------[i] Multiple Payment Dates or Events
----------[j] Subsequent Deferral Elections by Beneficiaries
-----[6] Accelerations of Payments
----------[a] Accelerations of Payments Generally Not Allowed
----------[b] Exceptions Allowing Acceleration of Payments
---------------[i] Domestic Relations Orders
---------------[ii] Conflicts of Interest
---------------[iii] Section 457 Plans
---------------[iv] Limited Cashouts
---------------[v] Plan Termination: Corporate Liquidation
---------------[vi] Plan Termination: Change in Control
---------------[vii] Other Plan Terminations
---------------[viii] State, Local, or Foreign Taxes
---------------[ix] Offsets of Participant Liability to Employer
---------------[x] Bona Fide Disputes with the Employer
---------------[xi] Linkage to a Qualified Retirement Plan
---------------[xii] TARP Executive Compensation Revisions
-----[7] Multiple Elections or Payment Events
----------[a] Elections Generally Apply Separately to Each Payment Event
----------[b] The Favored Payment Events
----------[c] Successive Deferral Elections
-----[8] Some Typical Retirement Situations
-----[9] Effective Dates and Related Planning
----------[a] Planning Opportunities Before 2009
----------[b] Stock Rights Relief Before 2009
----------[c] Deferrals Before 2005
-----[10] Taxes, Penalties, and Interest upon Failure to Conform to 409A
-----[11] Some Relief for Operational Failures to Conform to 409A
§ 9.04 Treatment of Certain Restricted Assets and Transfers Offshore
§ 9.05 Deferred Compensation Payable by Foreign Entities
§ 9.06 Income Tax Withholding from Plan Payments
§ 9.07 Estate or Gift Tax Imposed on Plan Benefits
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UNFUNDED NONQUALIFIED RETIREMENT PLANS
§ 9.01 Overview of Taxation of Plan Participants
-----[1] Taxation of Plan Payments
-----[2] Payments Under Certain Government and Tax-Exempt Organization Plans
-----[3] The Use of “Rabbi Trusts.”
-----[4] Harsh Treatment of Certain Premature or Delayed Payments
-----[5] Harsh Treatment of Certain Conditional Funding of Deferrals
§ 9.02 General Attributes of Unfunded Nonqualified Plans
-----[1] Unfunded Nonqualified Plans Described
-----[2] Taxation of Payments Received Under Unfunded Nonqualified Plans
-----[3] Conditionally Funded Nonqualified Plans (Rabbi Trusts)
-----[4] Grants of Stock Options or Stock Appreciation Rights to Employees
-----[5] Payments Under Plans of State or Local Governments and Tax-Exempt Entities
-----[6] State Community Property Laws
§ 9.03 Date Payments May Begin Under Section 409A
-----[1] Section 409A in General
-----[2] Deferred Compensation and Exclusions
----------[a] Deferred Compensation Defined
----------[b] Regular Payroll Payments
----------[c] Short-Term Deferrals
----------[d] Indemnification and Liability Insurance
----------[e] Certain Legal Settlements
----------[f] Separation Pay Plans
---------------[i] Exceptions for Compensation Conditioned on Separation from Service
---------------[ii] Separation Pay as a Short-Term Deferral
----------[g] Excluded Stock Rights
---------------[i] When Stock Rights Are Exluded from Definition of Deferred Compensation
---------------[ii] Exclusion of Nonstatutory Stock Options
---------------[iii] Exclusion of Stock Appreciation Rights
---------------[iv] Common Stock and Other Equity Interests
---------------[v] Modifications and Extensions
---------------[vi] Rights to Dividends
---------------[vii] Stock Rights Qualifying as Short-Term Deferrals
---------------[viii] Failure to Satisfy the Exclusion
----------[h] Restricted Property, Including Trust or Annuity Plans
----------[i] Recurring Part-Year Compensation
-----[3] Initial Deferral Elections
-----[4] Payment Dates or Events
----------[a] Payment of Deferred Compensation on Specified Dates or Events
----------[b] Specific Time or Fixed Schedule
----------[c] The Retiree’s Separation from Service
----------[d] The Retiree’s Death
----------[e] An Unforeseeable Emergency
----------[f] The Retiree’s Disability
----------[g] A Change in Employer Control
----------[h] Alternative Permissible Dates or Events
----------[i] Disputes and Refusals to Pay
----------[j] Earnings on Deferred Compensation
-----[5] Payment Dates and Allowable Deviations
----------[a] Allowable Times and Forms of Payment
----------[b] Allowable Deviations from Plan Payment Dates
----------[c] Other Permitted Delays of Payments
----------[d] Changes in Time or Form of Payment
----------[e] Subsequent Deferral Elections Involving Life Annuities
---------------[i] Allowable Non-Complying Elections
---------------[ii] 409A Definition of Life Annuity
----------[f] Subsequent Deferral Elections Involving Installment Payments
----------[g] Elections Affecting Short-Term Deferrals
----------[h] Domestic Relations Orders
----------[i] Multiple Payment Dates or Events
----------[j] Subsequent Deferral Elections by Beneficiaries
-----[6] Accelerations of Payments
----------[a] Accelerations of Payments Generally Not Allowed
----------[b] Exceptions Allowing Acceleration of Payments
---------------[i] Domestic Relations Orders
---------------[ii] Conflicts of Interest
---------------[iii] Section 457 Plans
---------------[iv] Limited Cashouts
---------------[v] Plan Termination: Corporate Liquidation
---------------[vi] Plan Termination: Change in Control
---------------[vii] Other Plan Terminations
---------------[viii] State, Local, or Foreign Taxes
---------------[ix] Offsets of Participant Liability to Employer
---------------[x] Bona Fide Disputes with the Employer
---------------[xi] Linkage to a Qualified Retirement Plan
---------------[xii] TARP Executive Compensation Revisions
-----[7] Multiple Elections or Payment Events
----------[a] Elections Generally Apply Separately to Each Payment Event
----------[b] The Favored Payment Events
----------[c] Successive Deferral Elections
-----[8] Some Typical Retirement Situations
-----[9] Effective Dates and Related Planning
----------[a] Planning Opportunities Before 2009
----------[b] Stock Rights Relief Before 2009
----------[c] Deferrals Before 2005
-----[10] Taxes, Penalties, and Interest upon Failure to Conform to 409A
-----[11] Some Relief for Operational Failures to Conform to 409A
§ 9.04 Treatment of Certain Restricted Assets and Transfers Offshore
§ 9.05 Deferred Compensation Payable by Foreign Entities
§ 9.06 Income Tax Withholding from Plan Payments
§ 9.07 Estate or Gift Tax Imposed on Plan Benefits
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The author intends that this website provide accurate and authoritative information on the subject
matter covered. However, the information provided on this website is not a substitute for the advice of
an attorney, accountant, or other professional; and the author is not offering legal, accounting, or
other professional advice. The material presented on this website is not intended for use, and may
not be used, to avoid tax penalties. If you need legal advice or other professional help, you should
seek (from an independent attorney, accountant, or other competent professional) advice based on
your own particular circumstances.
matter covered. However, the information provided on this website is not a substitute for the advice of
an attorney, accountant, or other professional; and the author is not offering legal, accounting, or
other professional advice. The material presented on this website is not intended for use, and may
not be used, to avoid tax penalties. If you need legal advice or other professional help, you should
seek (from an independent attorney, accountant, or other competent professional) advice based on
your own particular circumstances.