Finseca recently released a news article with a reminder of the December 31, 2020 deadline to amend Nonqualified Deferred Compensation arrangements.
“Some nonqualified deferred compensation (“NQDC”) arrangements sponsored by public companies require payments to certain executive officers to be delayed to the extent the payments cannot be deducted due to the $1 million deduction limit under Section 162(m) of the Internal Revenue Code (“Section 162(m)”). The Tax Cuts and Jobs Act of 2017 (the “TCJA”) made a number of changes to Section 162(m) that expand the scope of the deduction limit. Some of those changes make a mandatory Section 162(m)-related payment delay for NQDC problematic, potentially requiring payment delays for many years following an executive’s termination of employment. Proposed regulations related to Section 162(m) issued by the IRS on December 20, 2019 (the “Proposed Regulations”)1 allow companies to amend these mandatory Section 162(m)-related payment delay provisions, but only if the amendment is made by December 31, 2020.”