IRS issues Notice 2009-08 which provides guidance on recently enacted Section 457A. Section 457A became effective January 1, 2009 and generally provides that deferred compensation is includible in income when there s no substantial risk of forfeiture. The term ” nonqualified deferred compensation plan” means as defined in Section 409A(d), subject to some modifciations.
Document Excerpt
This notice provides interim guidance on the application of § 457A to nonqualified deferred compensation plans of nonqualified entities. Section 457A generally provides that any compensation that is deferred under a nonqualified deferred compensation plan of a nonqualified entity is includible in gross income when there is no substantial risk of forfeiture of the rights to such compensation. For purposes of § 457A, the term nonqualified deferred compensation plan has the same meaning as provided under § 409A(d), subject to certain modifications. For purposes of § 457A, the term nonqualified entity means (a) any foreign corporation unless substantially all of its income is (i) effectively connected with the conduct of a trade or business in the United States, or (ii) subject to a comprehensive foreign income tax, and (b) any partnership unless substantially all of its income is allocated to persons other than (i) foreign persons with respect to whom such income is not subject to a comprehensive foreign income tax, and (ii) organizations which are exempt from tax under Title 26 of the United States Code.
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