Part 1 of this article series presented findings in a survey by my firm, the Ayco Company, on participation eligibility, the income that is eligible for deferral under a nonqualified deferred compensation plan, and the timing of deferral elections. This article gives our findings on investment choices, the form and timing of distributions after the deferral period, and your scope for making changes in elections. It also explains the tax withholding and reporting for distributions.

When the amounts are properly deferred under 409A and you are an employee, they are part of…

The value of the compensation deferred plus any earnings on it which are distributed during that year are income, and tax withholding applies. On your W-2, you will see this in…