President Bush has signed into law the American Jobs Creation Act of 2004,
which makes changes to rules covering nonqualified deferred compensation programs.
Under the legislation (H.R. 4520), elections under nonqualified deferred compensation
plans must be made in the calendar year before the year in which the services
are performed. In the case of any performance-based compensation based on services
performed over a period of at least 12 months, such election may be made no
later than 6 months before the end of the period.
In addition, payments made under nonqualified deferred compensation programs
cannot be accelerated before the time specified or the schedule chosen at the
time of the deferral.
The law defines a "nonqualified deferred compensation plan" as any
plan that provides for the deferral of compensation, excluding a qualified employer
plan, any bona fide vacation leave, sick leave, compensatory time, disability
pay, or death-benefit plan.
In general, the law applies to amounts deferred after December 31, 2004.
The Treasury Department is expected to issue regulations for the legislation