Tax Facts

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Nonqualified Compensation
Employee Stock Options
Q 130 What are employee stock options and how are they taxed?

Q 131 What is restricted stock?

Q 132 How is restricted stock taxed? How are dividends on restricted stock taxed?

Estate Taxation
Q 684 If an employer provides, under a nonqualified agreement or plan, an income benefit only for certain survivors designated by family or marital relationship to the employee, how is the benefit treated for estate tax purposes in the employee’s estate?
Q 685 Is the value of a survivor benefit payable by an employer under a nonqualified salary continuation or deferred compensation agreement includable in the employee’s gross estate?
Gift Taxation
Q 711 Are death-benefit-only (DBO) plans subject to gift tax?
Q 744 Does an employee covered under a survivor income benefit plan make a gift of the survivor benefit for federal gift tax purposes?
Nonqualified Deferred Compensation
Q 111 What are the tax consequences of a funded deferred compensation agreement with an employer?

Q 112 What is a “secular trust” and how is it taxed?

Q 113 What is meant by “a substantial risk of forfeiture” under IRC Section 83?

Q 114 How is an employee taxed on the payments he receives from a nonqualified annuity or nonexempt trust?

Q 115 What are the tax benefits of an unfunded deferred compensation agreement with an employer?

Q 116 What requirements must be met by a private deferred compensation plan?
Q 117 What is meant by the “economic benefit” theory?

Q 118 What is the impact of the use of an informal funding or other security device in connection with a private deferred compensation plan?

Q 119 What is a “rabbi” trust and what are the income tax consequences of using such a trust to provide nonqualified deferred compensation benefits to employees?

Q 120 Can a private nonqualified deferred compensation plan serve as a temporary holding device for 401(k) elective deferrals?

Q 121 When are deferred amounts deductible by the employer?

Q 122 How are deferred compensation payments taxed when they are received by the employee or beneficiary?

Q 123 Are contributions to and postretirement payments from a deferred compensation plan subject to FICA and FUTA taxes?

Q 124 Are the tax benefits of a nonqualified deferred compensation plan available through an agreement with a state or local government or other tax-exempt employer?

Q 125 What requirements must a Section 457 plan meet?
Q 126 Is the cost of current life insurance protection under a Section 457 plan taxable to participants? Are death benefits under a Section 457 plan excludable from gross income?

Q 127 How are the participants in an eligible Section 457 plan taxed? In an ineligible plan?

Q 128 What rules apply to nonqualified deferred compensation plans covering state judges?

Q 129 What is an excess benefit plan? How is it taxed?
Q 130 What are employee stock options and how are they taxed?

Q 131 What is restricted stock?

Q 132 How is restricted stock taxed? How are dividends on restricted stock taxed?

Q 133 How are the benefits paid under an educational benefit trust taxed? When may an employer deduct contributions?

Quick Clicks
Q 112 What is a “secular trust” and how is it taxed?

Q 113 What is meant by “a substantial risk of forfeiture” under IRC Section 83?

Q 116 What requirements must be met by a private deferred compensation plan?
Q 118 What is the impact of the use of an informal funding or other security device in connection with a private deferred compensation plan?

Q 119 What is a “rabbi” trust and what are the income tax consequences of using such a trust to provide nonqualified deferred compensation benefits to employees?

Q 120 Can a private nonqualified deferred compensation plan serve as a temporary holding device for 401(k) elective deferrals?

Q 121 When are deferred amounts deductible by the employer?

Q 122 How are deferred compensation payments taxed when they are received by the employee or beneficiary?

Q 124 Are the tax benefits of a nonqualified deferred compensation plan available through an agreement with a state or local government or other tax-exempt employer?

Q 125 What requirements must a Section 457 plan meet?
Q 126 Is the cost of current life insurance protection under a Section 457 plan taxable to participants? Are death benefits under a Section 457 plan excludable from gross income?

Q 127 How are the participants in an eligible Section 457 plan taxed? In an ineligible plan?

Executive Compensation Navigator
Welfare Benefit Funds
Q 505 Starting Point – May an employer make deductible contributions to a welfare benefit fund to provide medical, disability and life insurance benefits (including postretirement medical and death benefits) for employees and independent contractors?
Q 506 When is a deduction allowed for contributions to a welfare benefit fund?
Q 507 What is the limit on the amount an employer may deduct for contributions to a welfare benefit fund to provide disability, medical, death and other benefits to employees and independent contractors?
Q 508 What are the tax consequences to the employer and to the welfare benefit fund if the employer contributes excess amounts to the fund?
Q 509 What income of a tax-exempt welfare benefit fund is taxable as unrelated business taxable income?

Q 510 If postretirement medical or life insurance benefits are provided to a key employee through a welfare benefit fund, what special rules apply?
Q 511 Must a welfare benefit fund providing postretirement life insurance or medical benefits meet nondiscrimination requirements?
Q 512 What is the penalty for providing certain “disqualified benefits” through a welfare benefit fund?
Q 513 Must a tax-exempt welfare benefit fund apply for recognition of its tax-exempt status?
Q 514 What is the exception for a welfare benefit fund that is part of a 10 or more employer plan?

Q 516 What is a “501(c)(9) trust” (VEBA)?

Q 517 What benefits can a 501(c)(9) trust (VEBA) provide?
Q 518 Are an employer’s contributions to a 501(c)(9) trust (VEBA) deductible?