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New IRS Guidance Regarding 409A -- Use of Offshore Trusts and Financial Health Trigger Arrangements: "Proceed with Caution" |
January 30, 2007
Previously published on March 27, 2006
Section 409A of the Internal Revenue Code imposes new restrictive Federal tax rules governing "nonqualified deferred compensation plans" and provides significant taxes on individuals who violate them. Among other requirements, Section 409A(b) prohibits:
The use of offshore trusts (and other arrangements) in connection with amounts payable under a nonqualified deferred compensation plan; and the use of financial health triggers restricting assets to protect the payment of benefits under a nonqualified deferred compensation plan in connection with a change in the financial health of an employer (or other service recipient).
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The views expressed in this article are solely the views of the author and not Martindale-Hubbell. This article is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. |
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