Change clause in the Deferred Compensation Plan

Aug 6th, 2022
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How to change clause in the Deferred Compensation Plan

4.8 out of 5
19 votes

its brian preston the money guy how about one from kevin oh this is this is a good one kevin said for someone leaving a public service position with a 457 does it make sense to leave the money here instead of rolling it over to utilize for early retirement in lieu of a taxable bridge account uh maybe perhaps try and talk a little bit about what makes 457s kind of unique and should you have sort of a different like litmus test that you go through when you decide what to do with that fund if youre leaving employment going somewhere oh for sure i mean this is why look i think the the governments trying to really be proactive on this i know when we we get sec guidance and other things they want to make sure when youre moving assets between qualified accounts that you understand your why because theres a lot of decisions that every individual needs to make because i think there were years in the investment industry where i was just like hey when you leave your employer roll it over int

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Distributions from a 409A Plan are income that you previously earned but did not receive until you took the distribution. This means that they will be reported by your employer on a W-2 form, which you should receive, even if you are no longer an employee at that company. It may also be reported on form 1099-MISC.
Client Service Center Information: As always, you can speak with a Deferred Compensation Plan Customer Service Representative about the Plan and your account(s) on the phone by calling at (212) 306-7760, 9am to 5pm, Monday through Friday, except holidays.
If an employee has a contractual right to a certain level of salary or other compensation such that the employees consent is required to reduce or eliminate the salary or other compensation, and if the employer commits to provide a replacement payment in a subsequent tax year, a 409A violation will occur.
Section 409A of the United States Internal Revenue Code regulates nonqualified deferred compensation paid by a service recipient to a service provider by generally imposing a 20% excise tax when certain design or operational rules contained in the section are violated.
Whether a payment or right to a payment is a substitute under section 409A is determined based on all facts and circumstances. In some instances, when the new payment or right explicitly results in the reduction or offset of the existing right, the new amount is clearly a substitute.
Investing your deferred compensation Your plan might offer you several options for the benchmarkoften, major stock and bond indexes, the 10-year US Treasury note, the companys stock price, or the mutual fund choices in the company 401(k) plan.
The 409A Treasury Regulations define a nonqualified deferred compensation plan as any plan, agreement, program or arrangement that provides a service provider (includes employees and nonemployee contractors) with a legally binding right to compensation payable in a later tax year.
IRC section 409A provides the rules and limitations for administering certain executive compensation arrangements. It provides that if certain requirements arent met, deferred compensation will be includable in gross income if its not subject to a substantial risk of forfeiture.

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