Richard Hyman

Could you give me some clarification of your reply, and if there is a specific place it describes the qualification of "soley". So far, I have seen only professional interpretations, not legal definitions. In this specific plan, the employee is only put into the plan, without option, when their income level is over the "highly compensated" limit this year at $125,000. If the income goes below this level, they are returned to the 401k type plan. In the NQDC plan in this case, there is a formula for a yearly bonus(making up for the lost company matching of the 401k plan), however, they are NOT required to contribute to the plan to receive this bonus. The maximum contribution for highly compensated employees, is 25%, while specific upper management levels can defer 100% of their income. How does that fit into your qualification of soley? How does the non-resident state qualify if the plan is soley? Will they possibly audit the return, to see if it meets their test of solely?

Non resident taxation of NQDC in New Jersey if residence is in Florida under fed code 104-95, distributions would not be taxed in the nonresident state if one of 2 conditions were met. The condition in question, is under section(ii) which state, if a plan was "created solely for the purpose of providing retirement benefits for employees in excess of the limitations imposed by 1 or more sections, including 401K plans". How do you interpret "Soley"? The plan I am questioning states explicitly that the plan was created to allow tax savings for the participants. I have submitted a non- resident tax return, requesting that all withheld NJ taxes be returned. Will that be allowed?