Section 409A was added to the tax code as part of the American Jobs Creation Act of 2004, in large part to prevent a repeat of the Enron scandal, when executives cashed out of their plans shortly before the company went under. The IRS gave companies until the end of 2008 to comply.
Right now, companies do not have to report how much they defer into compensation plans. They will eventually have to under Section 409A, once the IRS resolves some issues on valuing yearly compensation.
Nonetheless, the amount of money going into deferred compensation plans may have gone up last year. Wall Street bonuses paid to New York City securities industry employees rose 17% to $20.3 billion in 2009, according to an estimate by New York State Comptroller Thomas P. DiNapoli last week. The figure, based on tax collections, reflected cash bonus payments and deferred compensation for which taxes have been prepaid.
Copyright (c) 2010, Dow Jones. For more information about Dow Jones' services for advisors, please click here.