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ARTICLE · 17 JUNE 2005

Much Ado about Deferred Compensation: New U.S. Rules Prompt Compliance Reviews

Osler, Hoskin & Harcourt LLP
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Canadian corporations employing U.S. citizens should review their deferred compensation plans in light of a controversial new U.S. law. The new law primarily regulates elections to defer compensation and the timing of payments, but also includes limitations on funding methods and accelerated payouts.

CanadaEmployment and HR
Osler, Hoskin & Harcourt LLP
Osler, Hoskin & Harcourt LLP
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Canadian corporations employing U.S. citizens should review their deferred compensation plans in light of a controversial new U.S. law. The new law primarily regulates elections to defer compensation and the timing of payments, but also includes limitations on funding methods and accelerated payouts.

Executives and legal compliance team members are abuzz about sweeping new laws in the United States regulating the design and operation of a broad array of deferred compensation arrangements. Deferred compensation plans must comply with the provisions of the new law, Section 409A of the U.S. Internal Revenue Code, which was added to the Code under the American Jobs Creation Act of 2004. It became effective January 1, 2005 but transition rules and grandfathering exceptions may apply to some plans. The new law primarily regulates elections to defer compensation and the timing of payments, but also includes limitations on funding methods and accelerated payouts. The new rules are

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