As part of the American Jobs Creation Act of 2004, a new Section 409A was added to the Internal Revenue Code.  Section 409A generally provides that, unless certain requirements are met, amounts deferred under a nonqualified deferred compensation plan for all taxable years are currently includible in gross income to the extent not subject to a substantial risk of forfeiture.

While much of the focus on Section 409A has been with respect to taxable employers, it was recognized that there was an intersection of the standards articulated in Section 409A with the existing provisions under Section 457(f) which specifically covers ineligible (i.e., not subject to Section 457(b)) nonqualified deferred compensation arrangements of tax exempt employers.Continue reading→