• Pennsylvania Rules on Tax Withholding and Reporting for Non-Qualified Elective Deferred Compensation Arrangements
  • December 1, 2005
  • Law Firm: Pepper Hamilton LLP - Philadelphia Office
  • Under federal law, employee deferral contributions (and employer contributions) to 401(k) savings plans and other tax-qualified plans are not taxed to the employee until distribution (assuming all of the Code requirements are satisfied). Similarly, employee deferral contributions (and employer contributions) to a non-qualified deferred compensation plan generally are not taxed until the employee has the right to a distribution (under the "constructive receipt" rule of Code §83), unless the plan does not satisfy the requirements of Code §409A (which became effective for 2005).