Dec 18, 2008

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NFL Agents Are Warned About 409A

As we approach the end of 2008, when deferred compensation plans must be brought into documentary compliance with the rules under Code Section 409A, we sometimes forget about those poor non-executives who are burdened by the new rules as well.

The National Football Post posted this interesting comment on Monday about an urgent memo that went out this week to NFL agents regarding the tax consequences (current inclusion in income + 20% excise tax) under 409A if their client’s deferred compensation arrangements were not compliant with the new rules by the end of the year.

Code Section 409A was enacted o limit executives’ control over deferred compensation by providing strict rules regarding elections and distributions under such plans. I think it’s pretty safe to say that Congress did not anticipate burdening professional athletes with the new rules, but this provides a perfect example of how wide a net 409A can cast.