Creating a beneficial interest for the employee

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Reference no: EM131786905

The following tax consequence results for a non-qualified deferred compensation plan:

Question 4 options:

1) The employer receives a deduction as contributions are made to the employee's account if the plan is unfunded.

2) The employee does not realize income when contributions are made to a funded plan which is not subject to a substantial risk of forfeiture.

3) The employee that holds a beneficial interest in a rabbi trust is not taxed on contributions made to the trust because the funds are reachable by the employer's creditors.

4) The employer that funds a rabbi trust has an immediate deduction for contributions to the trust creating a beneficial interest for the employee.

Reference no: EM131786905

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