Randy Watson Posted January 4, 2007 Share Posted January 4, 2007 Assume a 457(f) pays an annual benefit over a 10-year period. The participant is taxed on the full amount upon vesting, even though they won't receive the entire benefit for 10 years. Since the participant already recognized the entire benefit as income and paid the tax, it does not appear as though it would matter if payments were "accelerated" after vesting. Anyone comments? Link to comment Share on other sites More sharing options...
Just Me Posted January 6, 2007 Share Posted January 6, 2007 1. 20% penalty tax. 2. extra tax based on interest plus 1% from date deferred. 3. actual interest. 4. bundled with all other similar (e.g., DC-type or DB-type) deferred compensation plans for tax and penalty purpose. So, based on all of these down sides, is there a way at this point to change the form and timing of payment under the 409A transition rules? Link to comment Share on other sites More sharing options...
Randy Watson Posted January 12, 2007 Author Share Posted January 12, 2007 Yeah, the ramifications are a little ridiculous considering the individual pays the tax on the entire amount up front. Link to comment Share on other sites More sharing options...
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