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Deferred compensation annual contribution


Guest Alison Williams
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Guest Alison Williams

Our client is a governmental entity (a city) who has recently extended an employment contract to a new city manager. In the contract they offer a "deferred compensation program annual contribution, payable in monthly installmets by the city, to a 401 or 457 type plan sponsored by an appropriate agency".

Would these contributions by the city be considered wages and subject to FICA, Medicare and not Withholding? Thanks for any guidance!

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This would depend on (a) whether the plan is a 401 plan or a 457 plan, and (B) whether the employee's participation in the arrangement is irrevocable for the term of employment. Any ideas on what arrangements might be available, and whether they currently provide for (or could be amended to provide for) this employee's participation? Also, you'd want to look at applicable state and local law to find out whether there are any restrictions on the types of plans that can be adopted, or the election by the employee.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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