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How should bonuses paid after year-end be handled for both income tax deduction and Internal Revenue Code (IRC) section 409A purposes?

April 26, 2017bonuses code deduction handled Internal IRC paid revenue year-end

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How should bonuses paid after year-end be handled for both income tax deduction and Internal Revenue Code (IRC) section 409A purposes?

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Employers frequently pay annual bonuses after the close of their fiscal years. Bonuses earned in 2007 may be paid in 2008, thus deferring the recognition of income by the employee into 2008. The question is whether such payments are treated as “deferred compensation.