Download this Paper Open PDF in Browser

Has Congress Stopped Executives from Raiding the Bank? A Critical Analysis of I.R.C. §409A

43 Pages Posted: 10 Sep 2007  

Michael J. Hussey

Widener University - Commonwealth Law School

Abstract

In October 2004 Congress passed the American Jobs Creation Act ("AJCA"). Among other things, the AJCA created Internal Revenue Code §409A to address perceived abuses of nonqualified deferred compensation. Section 409A contains detailed and restrictive provisions relating to nonqualified deferred compensation including rules on when distributions may be made, when the arrangement may be renegotiated, and new penalties applicable if a plan fails to qualify under §409A.

This paper focuses on how §409A began largely as a reaction to the sizeable distributions to Enron executives from their nonqualified deferred compensation accounts shortly before Enron's collapse. The paper discusses how §409A represents a major shift in nonqualified deferred compensation planning but does little to remedy the exact problem at Enron that gave rise to §409A.

Keywords: 409A, Nonqualified Deferred Compensation, Enron

JEL Classification: K34

Suggested Citation

Hussey, Michael J., Has Congress Stopped Executives from Raiding the Bank? A Critical Analysis of I.R.C. §409A. University of Missouri-Kansas City Law Review, Vol. 75, No. 2, 2006. Available at SSRN: https://ssrn.com/abstract=1010983

Michael J. Hussey (Contact Author)

Widener University - Commonwealth Law School ( email )

3800 Vartan Way
Harrisburg, PA 17106-9382
United States

Paper statistics

Downloads
349
Rank
70,469
Abstract Views
2,004