IRC §409A · NQDC

409A Deferred Comp Compliance

Non-qualified deferred comp has razor-thin election and distribution rules. Miss one and the IRS taxes the whole thing plus 20 percent.

Annual deferral amount

Marginal tax rate (percent)

Election timing

Distribution event

Years deferred

Specified employee 6-month delay applies?

409A Compliance Test

Compliance status

Cumulative deferred

If non-compliant: income inclusion

20 percent additional tax

Premium interest charge

Total cost of failure

§409A requires written elections before service year, distribution only on permitted events, no acceleration (other than narrow exceptions). Failure taxes entire deferred amount plus 20 percent plus interest.

Talk to a preparer about your NQDC plan

Permitted distribution events: separation, death, disability, fixed date/schedule, change in control, unforeseeable emergency. 6-month delay for specified employees of public companies. Educational tool, not legal advice. Call 689-331-5723 or email info@zerofusstaxes.com.