Deferred Compensation
Deferred compensation can provide economic benefits to key employees by deferring the taxes on the compensation, and providing for individual investment direction of the account balance until the benefits are paid. Structured correctly, deferred compensation plans can also benefit employers by providing retention incentives.
For 25 years the attorneys at Sherman & Patterson have assisted clients in designing and documenting their nonqualified deferred compensation arrangements to benefit both the employer and the employees. We focus on assuring the plan passes IRS muster with respect to a host of issues, such as section 409A, constructive receipt and economic benefit limitations. In tax-exempt employers, we focus first on exhausting 457(b) eligible deferred compensation plan opportunities, and then on satisfying the requirements under Section 457(f) of the tax code regarding substantial risks of forfeiture. We also evaluate and install so-called “rabbi trusts” where appropriate.