Tax Planning for Retirees

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] Deferred Payments Limited to Specified Dates or Events
  • —–[6] Exceptions Allowing Accelerations of Payments
  • —–[7] Elections to Further Delay Payments
  • —–[8] Harsh Treatment of Certain Conditional Funding of Deferrals
  • —–[9] Golden Parachute Payments
  • § 9.02 General Attributes of Unfunded Nonqualified Plans
  • —–[1] Unfunded Nonqualified Plans Described
  • —–[2] Taxation of Payments Received Under Unfunded Nonqualified Plans
  • —–[3] Third Party Guarantees of Deferred Compensation
  • —–[4] Conditionally Funded Nonqualified Plans (Rabbi Trusts)
  • —–[5] Grants of Stock Options or Stock Appreciation Rights to Employees
  • —–[6]  Payments Under Plans of State or Local Governments and Tax-Exempt Entities
  • —–[7]  State Community Property Laws
  • § 9.03 Date Payments May Begin Under Section 409A
  • —–[1] Section 409A in General
  • —–[2] Substantial Risk of Forfeiture
  • ———-[a] Substantial Risk of Forfeiture Generally
  • ———-[b] Participant Who Is an Owner
  • —–[3] 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
  • ———-[j] Application of 409A to Independent Contractors
  • —————[i] Identification of Affected Independent Contractors
  • —————[ii] Separation from Service for an Independent Contractor Under 409A
  • ———-[k] Deferred Compensation Plan Defined
  • —–[4] Initial Deferral Elections
  • —–[5] 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
  • —–[6] 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] Election Conditions and Allowable Non-Complying Changes
  • —————[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
  • —–[7] 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]  Social Security Tax Withholding
  • —————[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
  • —–[8] Multiple Elections or Payment Events
  • ———-[a] Elections Generally Apply Separately to Each Payment Event
  • ———-[b] The Favored Payment Events
  • ———-[c] Successive Deferral Elections
  • —–[9] Some Typical Retirement Situations
  • —-[10] Effective Dates and Related Planning
  • ———-[a] Planning Opportunities Before 2009
  • ———-[b] Stock Rights Relief Before 2009
  • ———-[c] Deferrals Before 2005
  • —–[11] Taxes, Penalties, and Interest upon Failure to Conform to 409A
  • —–[12] Some Relief for Failures to Conform to 409A
  • § 9.04 Unfunded Nonqualified Plans of State Governments and Tax-Exempt Organizations
  • —–[1] Rules for 457(f) Plans of State and Tax-Exempt Organizations Plans Are in Transition
  • —–[2] 457(f) Plans of State and Tax-Exempt Organizations Under Existing Regulations
  • —–[3] 457(f) Plans of States and Tax-Exempt Organizations Under Proposed Regulations
  • ———-[a] Taxation of Deferred Compensation from States and Tax-Exempt Organizations
  • ———-[b] Exclusions from Treatment as Deferred Compensation Under Section 457(f) Plans
  • —————[i] Exclusions from 457(f) Generally
  • —————[ii] Discretion to Reduce or Eliminate Compensation
  • —————[iii] Exclusion of Short-Term Deferrals
  • —————[iv] Exclusion of Recurring Part-Year Compensation
  • —————[v] Exclusion of Bona Fide Severance Pay Plans
  • —————[vi] Exclusion of Window Retirement Programs
  • —————[vii] Exclusion of Other Plans and Payments
  • ———-[c] Substantial Risk of Forfeiture
  • —————[i] When Deferred Compensation is Subject to a Substantial Risk of Forfeiture
  • ——————–[A] The Future Performance of Substantial Services
  • ——————–[B] Condition Related to the Purpose of the Compensation
  • ——————–[C] Involuntary Severance from Employment Without Cause
  • ——————–[D] Forfeiture on Violation of a Covenant Not to Compete
  • —————[ii] Deferrals of Regular Compensation and Extensions of Deferrals
  • ———-[d] Application of Code Section 409A to a Section 457(f) Plan
  • —————[i] Harsh Consequences of Failure to Comply with Section 409A
  • —————[ii] Section 409A Payment Events and Deferral Elections
  • —————[iii] Accelerations of Payments under Sections 457(f) and 409A
  • —————[iv] Short-Term Deferrals under Sections 457(f) and 409A
  • ——————–[A] Short-Term Deferrals Generally
  • ——————–[B] More Problematical Short-Term Deferrals
  • ——————–[C] Extending a Risk of Forfeiture for a Short-Term Deferral
  • —————[v] The Consequences of Violating 409A Can Be Both Onerous and Complex
  • —–[4] Transition from a Taxable Entity to an Exempt Entity
  • § 9.05 Treatment of Certain Restricted Assets and Transfers Offshore
  • § 9.06 Deferred Compensation Payable by Foreign Entities
  • § 9.07 Golden Parachute Payments
  • § 9.08 Tax Withholding from Plan Payments
  • § 9.09 Tax on Net Investment Income Not Applicable
  • § 9.10 Estate or Gift Tax Imposed on Plan Benefits

» Chapter 10 – FUNDED NONQUALIFIED EMPLOYER PLANS