Topics for Retirement Plans. Section A applies to compensation that workers earn in one year, but that is paid in a future year.

8 Things You Need to Know About Section A - Mercer Capital

This is referred to as nonqualified deferred compensation. This is different from deferred compensation in the form of elective deferrals to qualified plans such as a k plan or to a b or b plan. The compensation is taxed in the same manner as it would be taxed if it were not covered by Section A. Section A has no effect on FICA Social Security and Medicare tax.

At issue is how the law change applies to people who have compensation deferred from one year to a future year. Under the new law, when teachers and other employees are compensated on a month pay period in lieu of the 9 or month actual work period, they are deferring part of their income from one year to the next.

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For instance, a teacher who is paid over a month period, running from August of one year through July of the next year, rather than over the August to May school year, a rule 409a stock options period, falls under this law.

No, Section A does not require that an employee be provided any election regarding how the employee is paid.

For example, a school district make paypal money doing surveys provide that all teachers will have their pay spread over 12 months, without providing any election to the teachers. In that case, the rules under Section A would not apply and no additional taxes would be imposed.

What is Section A?

What was the effect of Notice for most public school employees? Released on July 3,the Treasury Department and IRS issued Interim Guidance with Notice If the criteria in the Notice is met, it is expected that regulations under Sections f and A would not apply to arrangements of electing months over months of pay.

On August 7,the IRS established assistance through Frequently Asked Questions on Section A and Deferred Compensation which provides guidance on how to establish the deferred election within the provisions of Section A.

NoticeInterim Guidance on 10 vs. IR, August 7,New Rule Will Not Affect Teacher Salaries in Upcoming School Year. Frequently Asked Questions on Section A and Deferred Compensation.

NoticeDelayed Effective Date of Section A Requirements. Presentation Slides on 10 vs. Subscriptions IRS Guidewire IRS Newswire QuickAlerts e-News for Tax Professionals IRS Tax Tips More. Know Your Rights Taxpayer Bill of Rights Taxpayer Advocate Accessibility Civil Rights Freedom of Information Act No FEAR Act Privacy Policy.

Treasury Treasury Inspector General for Tax Administration USA.