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Termination of Split Dollar NQDC


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Guest angiocath

My employer terminated our Split Dollar NQDC plan two years ago and last year we recieved payment for our share of the investment. I am still an employee of the company. How should the payment be reported to the IRS. My employer used a 1099-Box 7 which makes me responsible for self-employment tax on the amount. Is this correct? I have gotten several different conflicting opinions that the money should have been reported either as W2 wages or 1099 box 3 income.

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Payment from a terminating split-dollar plan doesn't seem to be any different than a payment from a nonqualified deferred compensation plan, which generally leads to W-2 reporting. While Notice 2007-34 is the authority on the interaction of 409A with split-dollar, it does not cover W-2/1099 reporting.

 - There are two types of people in the world: those who can extrapolate from incomplete data sets...

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