Deferred Compensation: Make Changes or Pay Taxes Under New Act

Congress has passed legislation that will substantially affect all nonqualified deferred compensation plans and employment agreements that include deferral arrangements, and may also affect other forms of compensation. The new legislation, included in the American Jobs Creation Act of 2004 (“Act”), amends the Internal Revenue Code and will take effect January 1, 2005. Employers need to begin immediately reviewing their deferred compensation plans and agreements, if possible before employees make deferral elections for 2005.