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ARTICLE · 30 NOVEMBER 2005

The Basics: Deferred Compensation and Deferred Compensation Plans

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
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Section 409A of the Internal Revenue Code of 1986 (the "Code") was recently enacted under the American Jobs Creation Act of 2004 (the "Act"), and it governs arrangements that provide for the deferral of compensation to employees and other service providers.

United StatesEmployment and HR
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Originally published in Mintz Levin Deferred Compensation Advisory Series Issue No. 3

Section 409A of the Internal Revenue Code of 1986 (the "Code") was recently enacted under the American Jobs Creation Act of 2004 (the "Act"), and it governs arrangements that provide for the deferral of compensation to employees and other service providers. Code § 409A generally applies to amounts deferred after December 31, 2004 under a "deferred compensation plan," which is defined to mean any plan that provides for the deferral of compensation, other than tax-qualified plans and bona fide vacation leave, sick leave, compensatory time, disability pay, and death benefit plans. The concepts of deferred compensation and deferred compensation plan are therefore critical to understanding and applying Code § 409A.

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