New Nonqualified Deferred Compensation Legislation


The American Jobs Creation Act of 2004 (the “Act”) adds a new Code Section 409A that will have a far-reaching impact on Nonqualified Deferred and Equity Compensation Plans and Arrangements.

What types of deferrals are covered by the new legislation?

Any plan or arrangement that provides for the deferral of compensation.


*Account Balance Plans (employee deferral as well as employer wrap plans)

*Supplemental Executive Retirement Plans (SERPs)

*Stock Appreciation Rights (SARs)

*Discounted Nonqualified Stock Options

*Severance Exceptions:

*Qualified plans, tax-deferred annuities, 457(b) plans, SEPs, SIMPLEs and qualified governmental excess benefit arrangements.

Please see full alert for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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