Tax Bill Alert: Section 409A Deferred Compensation is Preserved Under House Amendment

By Bindu M. Culas, Samantha Nussbaum

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Today, House Ways and Means Committee Chairman Brady released an amendment that impacts several provisions of H.R. 1.

Most notably for executive compensation, the amendment strikes Section 3801 of H.R. 1 (which introduced a new “Section 409B”), thereby preserving the current-law tax treatment of nonqualified deferred compensation.

This means IRC Section 409A is still alive, along with stock options and other forms of equity-based vehicles. 

While the proposed bill is expected to face additional change over the coming days and weeks, including a full House vote that’s expected next week, this development is one worth following.  You can read a section-by-section summary of the Chairman’s amendment here.

The Senate just unveiled its own tax plan.  It will be interesting to see if there is alignment with the executive compensation portions of the amended House version once the Senate releases its version of the tax bill.  More on the Senate version will follow.


Portrait of Bindu M. Culas, PrincipalBindu M. Culas
Principal

Bindu Culas has over 15 years of experience advising clients on the US and international legal, tax and regulatory aspects of designing and structuring equity incentive programs, employment agreement, and severance and change-of control plans. Bindu has worked with both domestic and foreign publicly traded and privately held companies as well as pre-IPO companies.


Portrait of Samantha Nussbaum, PrincipalSamantha Nussbaum
Principal

Samantha Nussbaum has consulted on behalf of public and private companies, compensation committees, and senior management on all aspects of executive compensation. Samantha’s consulting and legal background includes advising on executive compensation in the context of mergers and acquisitions, spin-offs, and initial public offerings; executive employment, severance, and change in control agreements; equity incentive plans; deferred compensation; and securities laws, including reporting and disclosure implications.