FAQs: Deferred Compensation

1. Am I permitted to receive a payment of deferred compensation after I enter government service?

The answer to this question depends on your personal circumstances. However, the one answer that applies to all filers is that you should seek advice from an agency ethics official before receiving the payment.

2. What if the terms of my separation have not been finalized and will affect what I receive under the deferred compensation plan?

In most cases, you will need to finalize these terms before completing your financial disclosure report and before entering government service. You also need to obtain advice from your agency ethics official. It is important that you contact your agency ethics official as soon as possible to learn about any ethics laws that will be applicable to your deferred compensation payment after you enter government service.

3. What if my agency decides that I must exit a deferred compensation plan to resolve a conflict of interest under the government’s ethics laws, but my employer raises concerns about compliance with 26 U.S.C. § 409A (sometimes referred to as “409A”)?

Neither the U.S. Office of Government Ethics nor your agency’s ethics officials can provide you (or your employer) with tax advice. You may want to consult with your tax advisor. In that case, you may want to ask your tax advisor whether 26 C.F.R. § 1.409A-3(j)(4)(iii) is relevant to your situation.  (This answer was drafted in 2011.)

 

This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.

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