409a 17 year anniversary

Celebrating the Birthday of IRC Section 409A

Fulcrum Partners Deferred Compensation News

If IRC Section 409A had an official day on the calendar it would be every October 22nd.

Seventeen years ago, on October 22, President George W. Bush signed the American Jobs Creation Act of 2004. With this executive action, the terms and requirements of nonqualified deferred compensation arrangements became better defined, more regulated, and in many ways, more user friendly.

Before IRC Section 409A was added to the U.S. tax code in 2004, nonqualified deferred compensation arrangements were more loosely regulated. As a result, companies such as Enron made headlines when, on the brink of collapse, executives drew their deferred compensation in advance of the corporate bankruptcy they knew was inevitably coming. Although this action was legal at the time, its ethics were certainly questionable, and paved the way for the enactment of IRC Section 409A.

IRC Section 409A improved deferred comp by better defining it

Good fences make good neighbors, and with the 2004 regulations on deferred compensation plans, organizations and their executive compensation consultants have since been well positioned to design plans that effectively and ethically serve both executives and the objectives of the organization.

Although you may not find IRC Section 409A Day ‘officially’ on your calendar, perhaps it should be. And what better day than today, October 22, to celebrate it? It’s also well worth noting, and appropriate that all month long, October is (officially) National Retirement Security Month, a month-long effort to raise public awareness of the importance of financial wellness and saving for retirement security.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.

Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through CapAcuity, LLC; Lion Street Advisors, LLC (LSF) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI, LSF and CapAcuity, LLC. are non-affiliated entities and separate entities from OneDigital and Fulcrum Partners.

Unless otherwise noted, VAI/VSI, LSF are not affiliated, associated, authorized, endorsed by, or in any way officially connected with any other company, agency or government agency identified or referenced in this document.

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