Use of the 409A Deferred Compensation Plan for AG ministers or employees generally falls under the following three considerations:
- The participant wants to contribute in excess of the maximum limitation of the AG 403(b) plan.
- The contribution involves several years’ worth of contributions from an employer who has not been contributing regularly, and/or that employer wants to send a lump sum plus monthly contributions.
- The contribution is a lump-sum deposit given to the minister as a retirement gift.
A well-drafted plan can allow for deferment of all taxable compensation until distribution. The money still legally belongs to the employer, but it can be set aside and invested for growth in the 409A.
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