What Are 409A Plans?
409 A Plans refer to a non-qualified deferred compensation has been earned by an employee but not yet received from their employer. Because the ownership of the compensation—which may be monetary or otherwise—has not been transferred to the employee, it is not yet part of the employee’s earned income and is not counted as taxable income.
The Internal Revenue Service code 409A governs for-profit NQDCs, such as plans for employees working for a large corporation. Other plans for employees of non-profits or government entities are included under IRS Sections 457(b) or 457(f).
