Question

Let's do some internet searches on deferred compensation. Identify if it is authoritative or non-authoritative. I am looking for some research in the Codification on this

Answer 1

Meaning of Deferred Compensation:

Deferred compensation is a portion of employee's salary which is kept aside for payment on the specified date, it is usually paid on retirement. Some employees opt for deferred compensation plans because it provides tax benefits. Deferred compensation plans may reduce current year tax burden on employees. When an employee contributes to the plan, the amount contributed reduces taxable income for that year, therefore reducing the total taxes paid.

Examples: retirement plans, pensions and stock options, etc.

Types:

There are two types of deferred compensation plans: qualified and non qualified. Qualified deferred compensation plans include 401(k) and 403(b) plans. These are much secure when compared to non qualified plans. Non qualified deferred compensation plans are just a written agreement between employer and employee. Qualified plans have limits while unqualified plans don't have any such limits.

Deferred compensation plans are identified as authoritative or non authoritative?

Yes, the deferred compensation plans identified as authoritative. IRS now has created new rules for all non qualified compensation plans that are known as section 409A. The IRS now has the authority, the support of the public and politicians, and mountains of motive to aggressively pursue NDCPs that violate tax code section 409A. If the IRS discovers a violation, money that was previously deferred becomes taxable and is treated as a late payment. Interest penalties are assessed. Thus, there's a major incentive to comply.

ASC- 710 provides guidance on compensated absences, deferred compensation and lump sum payments under Union contract, and on deferred compensation.