Business Planning- Non-Qualified Deferred Compensation Arrangements
The Law Firm of Pozzuolo Rodden, P.C., Philadelphia Business Law Lawyers, announces the release of the article “Non-Qualified Deferred Compensation Arrangements Offers Flexibility and Advantageous Tax Treatment”
The non-qualified deferred compensation arrangement (“NQDC”) offers advantageous tax treatment that can assist employers in attracting and retaining talented employees. Under an NQDC, the payment of a portion of an employee’s compensation is deferred until a later tax-year (or years) than the current tax-year in which the services were performed. NQDCs are exempt from the strict requirements (funding, vesting, nondiscrimination, etc.) of qualified plans, however, certain requirements must be met to ensure validity of these arrangements, including those set forth in Section 409A of the Internal Revenue Code and accompanying regulations more recently established by Congress (in the wake of the Enron scandal). While NQDC plan documents must strictly adhere to these rules, they offer employers more flexibility than through qualified pension or profit-sharing plans.
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