Tax changes affect deferred compensation plans

Beginning in 1994 the government eliminated the wage base limit for the Medicare portion of FICA. All plans of deferred compensation are subject to FICA. For FICA tax purposes, a nonqualified deferred compensation plan or arrangement includes an arrangement under which the parties defer compensation...

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Bibliographic Details
Published in:Strategic finance (Montvale, N.J.) N.J.), 1995-05, Vol.76 (11), p.16
Main Authors: Peters, Robert S, Shannon, Betsy Sue
Format: Magazinearticle
Language:English
Subjects:
Compensation plans
Deferred compensation
Employers
Executive compensation
FICA
Liability
Medicare
Social security
Tax rates
Tax regulations
Tax services
Taxes
Wages & salaries
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Summary:Beginning in 1994 the government eliminated the wage base limit for the Medicare portion of FICA. All plans of deferred compensation are subject to FICA. For FICA tax purposes, a nonqualified deferred compensation plan or arrangement includes an arrangement under which the parties defer compensation by deliberately departing from the company's customary payment schedule through contract negotiation. The IRS has issued Notice 94-96 which provides guidance to employers on the tax and penalty implications of deferred compensation plans.
ISSN:1524-833X