FICA - Defined Benefit NQDC - Determined in Year Reasonably Ascertainable

[rocknrolls2]

Employer P maintained a nonqualified defined benefit SERP for its employees. Because the amount was not reasonably ascertainable until just before an employee retired, P determined the FICA liability and paid it for the year in which the employee terminated. Employee C terminated employment in 2010 and his/her FICA liability was determined and paid during 2010. P is in bankruptcy proceedings during 2010. Two years later, P emerges from bankruptcy and agrees neither to fund or pay its nonqualified deferred compensation plans. Does the fact that the payments under the plan stopped require a recalculation of the FIC A liability? .df

[mbozek]

Employer P maintained a nonqualified defined benefit SERP for its employees. Because the amount was not reasonably ascertainable until just before an employee retired, P determined the FICA liability and paid it for the year in which the employee terminated. Employee C terminated employment in 2010 and his/her FICA liability was determined and paid during 2010. P is in bankruptcy proceedings during 2010. Two years later, P emerges from bankruptcy and agrees neither to fund or pay its nonqualified deferred compensation plans. Does the fact that the payments under the plan stopped require a recalculation of the FIC A liability? .df

I always thought that the benefits in a NQDC plan were at risk of being seized by creditors which is different from the IRS priority to collect taxes on wages paid. IRC 3121(v)(2) provides that payments are taxed when there is no substantial risk of forfeiture of the rights to the deferred amount. If there was no risk of forfeiture when P retired then the FICA tax is due. Under IRC 3202(b)(2) an employer required to deduct the FICA tax shall be liable for payment of such tax and shall not be liable to any person for payment of such tax.