Has anyone know calculated the additional tax and interest for W 2 box 12 code Z, non qualified deferred income that fails to satisfy section 409 (a)?

Forum|Forum|6 years ago
May 12, 2020
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Best answer by sjrcpa

I had one where the business was sold. Buyer assumed the deferred comp plan, all disclosed and in good 409A order, and messed it up somewhere along the way. My client, the seller, got an amended W-2 2 years later, as did a number of the other employees who remained with the buyer. That's the only time I've seen it.

itonewbie

Level 15

What you have is §409A. §409(a) is a totally different section.

Since the employer has reported the nonqualified deferral as required, all you need to do is to computer the 20% additional tax on the tax due on the amount reported as Code Z.

US employers (and many foreign employers who routinely hire Americans), after many years of struggle with updated guidance, are fully aware of the implications and reporting requirements of §409A, it would be unusual for them to let this slip. What was this arrangement and what actually was the trigger?

---------------------------------------------------------------------------------Still an AllStar

sjrcpaAnswer

Level 15

I had one where the business was sold. Buyer assumed the deferred comp plan, all disclosed and in good 409A order, and messed it up somewhere along the way. My client, the seller, got an amended W-2 2 years later, as did a number of the other employees who remained with the buyer. That's the only time I've seen it.

The more I know the more I don’t know.

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