Ca Assembly Bill 1173, that was signed into law on Oct 4, 2013, offers that, for taxable years starting Jan 1, 2013, the excise duty price imposed by California for noncompliance with California's equal of Section 409A is decreased from 20% to 5%.

 

Generally, a non-qualified deferred compensation program can be an agreement that offers the repayment of compensation in one year later compared to the year at which compensation was made. Specifically excluded in the definition of non-qualified deferred compensation programs, and consequently not subject to Section 409A, are taxqualified pension plans, including 401(k) programs, and bona-fide holiday leave, sick leave, compensatory time, disability pay, and death benefit programs. Strategies, arrangements, and plans that may provide for obligations which are subject to Section 409A comprise employment arrangements, severance arrangements, change in management arrangements, other settlement arrangements providing for delayed obligations, reduced stock options, and additional phantom equity plans, including restricted stock units.

 

Whether a non-qualified deferred compensation program doesn't conform with Section 409A, persons qualified to get payments below the plan might be subject to government and state income taxes before compensation below the plan is compensated (with emotional interest enforced when the individual doesn't properly identify the compensation and cover the associated income taxes), and also the individual will probably be subject to an added 20% Section 409A federal excise taxes. For more information on filing State Income Tax Returns, click here.