Jump to content

Acceleration of Payment


Randy Watson

Recommended Posts

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

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

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...