409a as collateral for loan
Posted 14 December 2011 - 03:26 PM
Thanks for any help.
Posted 14 December 2011 - 03:33 PM
Posted 14 December 2011 - 04:53 PM
Posted 14 December 2011 - 05:29 PM
Posted 15 December 2011 - 10:42 AM
Posted 15 December 2011 - 11:59 AM
Posted 16 December 2011 - 11:13 AM
When examining the answers and documents received in response to these questions, look for indications that --
a. the employee has control over the receipt of the deferred amounts without being subject to substantial limitations or restrictions. If the employee has such control, the amounts are taxable under the constructive receipt doctrine. For example, the employee may borrow, transfer, or use the amounts as collateral, or there may be some other signs of ownership exercisable by the employee, which should result in current taxation for the employee
That doesn't say that the employee may borrow; it says that if there is language in the plan that says that an employee may borrow, there is constructive receipt and current taxation.
Since final 409A regs came out after the publication of the audit guide, if the plan is subject to 409A, you might want to review the language in §1.409A-3(f) as well.
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Posted 16 December 2011 - 11:14 AM