Employee Benefits Blog

Posts tagged Non-qualified deferred compensation plans

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Non-Qualified Deferred Compensation Plans: Don’t Forget FICA

A fundamental but sometimes overlooked aspect of implementing a non-qualified deferred compensation (NQDC) plan is the issue of FICA payment. We have encountered a few situations recently where employers have set up NQDC plans with everything, including an exhaustive Section 409A analysis, executed in a seemingly perfect fashion, with one glaring exception: the deferrals were not included in income for FICA purposes at the time of vesting. Unfortunately, it appears that, despite everyone’s best intentions, this important step can fall through the cracks at the time of implementation.