For-profit companies have been at risk for losing their tax deduction for excessive salaries, with publicly-traded companies subject to a specific $1 million limit that the TCJA made easier to exceed.
Certain nonprofit organizations have been at risk for “intermediate sanctions,” but the Act also created a new Internal Revenue Code (Code) section that places tax-exempt organizations and governmental entities at risk for a 21 percent excise tax for excessive compensation.
Amounts contributed to a retirement plan avoid or delay the
application of these rules.
Amounts contributed to and
distributed from retirement plans subject to Code ss. 401(a), 401(k), 403(b),
and 457(b) are not included in “compensation” that can trigger the penalty; and
amounts contributed to retirement plans subject to Code ss. 409A or 457(f)
(often called “nonqualified deferred compensation plans”) are not included in
the assessment until those amounts are distributed or no longer subject to a
substantial risk of forfeiture.
Have a Tax Problem?
Contact the Tax Lawyers at
Marini& Associates, P.A.
for a FREE Tax Consultation Contact Us at:
Toll Free at 888-8TaxAid (888) 882-9243
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