Wages for employment can be paid currently as earned. However, in many cases compensation can be paid at a later date. One advantage to the employee is that the deferral of the compensation to a later date may permit it to be reported for income tax purposes when the employee is in a lower income tax bracket, such as following retirement. The validity of this presumption is not clear because of the changes in the tax system, etc. Deferred compensation is subject to a wide array of tax rules including the provisions of Code Section 409A added by the 2004 Jobs Act. If the provisions of Code Section 409A are not met the income will have to be included in income currently and cannot be deferred.
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