Deferred Compensation Provisions in Tax Reform Legislation in Flux

This week, the House Ways and Means Committee approved a modified version of the tax reform bill that was introduced last week.  In addition, an alternative bill was introduced in the Senate.  The Senate version is scheduled for markup by the Senate Finance Committee beginning on Monday. The current House and Senate versions appear to have some significant differences.  They notably take very different approaches to nonqualified deferred compensation.

Modified House Bill.  The version of the legislation that was approved by the House Ways and Means Committee entirely removed any changes to nonqualified deferred compensation plans.  Please see theHRBenefitsAuthority from November 8, 2017, for more detail about the sweeping nonqualified deferred compensation plan changes that were included in the originally proposed House bill.

Senate Bill.  Although the full text of the Senate bill has not yet been released, summaries indicate that it contains nonqualified plan changes that are largely identical to those in the originally proposed House bill.  Specifically, under this bill, all nonqualified deferred compensation would become taxable on vesting, which would transform the entire nonqualified deferred compensation plan industry.

At this point, it is difficult to predict what changes, if any, will be coming for nonqualified deferred compensation plans.  We will continue to monitor both of these bills closely and will let you know about important developments.

Contact Information.  For more information, please contact Don Mazursky (404.888.8840), David Putnal (404.888.8836), Glenn Infinger (404.888.8845), Toby Walls (404.888.8870), Teri King (404.888.8847), Angela Roberts (404.888.8822),  Alex Smith (404.888.8839) or Chandra Burns (404.888.8834).

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