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NQ Def Comp & Change of Ownership


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A NQ Deferred Compensation Plan wishes to change ownership on the annuity being used from the plan sponsor to the annuitant/participant.

Is this allowable?

What tax issues will there be?

Wouldn't this be immediately taxable to the participant?

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Under IRC 83 the transfer of property from an employer to an employee on acount of the performance of services is a taxable event to the employee. Therefore the employee would be taxed on the value of the annuity on the date of transfer and reported as W-2 income. The only way there would not be taxation is if the employee had previously included the annuity in income tax on account of constructive receipt.

mjb

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