Timing compensation in a changing tax climate – All eyes on Sec. 409A

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Abstract: Many people expect to see significant tax reform in the near future now that Republicans are in control of Congress and President Trump is in office. Assuming that tax rates are reduced, and that favorable rates won’t last forever, what does this mean for compensation programs? Many executives and business owners will want to take advantage of this window of opportunity by deferring or accelerating compensation so that it’s received while rates are low. But this article explains why it’s important to be mindful of Internal Revenue Code Section 409A — though a sidebar explains that, under certain circumstances, a business may defer certain bonus payments to the following tax year.