House Tax Bill Targets Deferred Compensation Earned After January 1, 2018 (Really)

It’s early days yet for the Tax Cuts and Jobs Act released last week by the House Ways and Means Committee, but one thing is clear: Congressional tax writers are scouring the landscape to find a combination of more revenue and accelerated revenue from various sources in order to pay for the substantial cuts in income taxes promised by the House Bill. Learn more about the House Tax Bill, including sweeping changes to deferred compensation and narrow restrictions on deductible compensation under code section 162(m), on the Verrill Dana website.

What Employers Should Do Now

Much more will be said and written about the House Bill as it progresses through the legislative process. The bill has already been modified by the mark up released yesterday by the House Ways and Means Committee and it remains to be seen what the Senate Finance Committee produces in the way of potential tax legislation. It seems unlikely that the January 1, 2018 effective date for new Code Section 409B will survive, but employers may wish to consider delaying 2018 deferral elections or accepting them subject to suspension depending on the final terms of tax reform legislation. Similarly, employers may wish to delay or suspend contributions to be made in 2018 (other than contributions attributable to services provided before January 1, 2018) until the tax reform legislation is finalized. In any event, employers should continue to pay close attention to the benefits and compensation aspects of the tax reform legislation and fasten their seatbelts for what could be a bumpy ride.