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NEW! Foreign Executives Moving To The United States To Work: What To Know About Your Company’s Nonqualified Deferred Compensation Plan

If you become a taxpayer in the United States and participate in a nonqualified deferred compensation (NQDC) plan, you need to be concerned about both Section 409A and Section 457A of the US Internal Revenue Code. This article explains what you must know to avoid tax penalties or compliance issues.

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Key Points in This Article
Be aware of both Section 409A and Section 457A of the US Internal Revenue Code, and be sure you understand the rules of FATCA reporting.
Section 457A will apply only if you continue to defer compensation paid by an employer located in a tax haven outside the US.
If your employer's NQDC plan located outside the US does not satisfy the requirements of Section 409A, all compensation deferred may be immediately subject to income tax and an additional 20% excise tax, even if that compensation was earned and deferred before you moved to the US. An exemption from Section 409A is available in certain limited circumstances.