Vanderbilt Law Review


James F. Neal

First Page



For an important number of people in our "affluent society," the problem of spreading large current earnings, and the federal income tax imposed thereon, over a number of years has taken on sizeable proportions. Only slightly helpful for some of these people are the deferred compensation provisions of sections 401 through 404 of the Internal Revenue Code of 1954 (hereinafter referred to as the Code).'Consequently, many highly paid executives must still resort to other arrangements. The purpose of this paper is to explore the present status, from an income tax standpoint, of those non-qualified arrangements between employers and employees which have as their object the deferring of compensation for current services. Much has been written on this subject, but recent developments involving both funded and unfunded plans, as well as the increasing use of the latter, seem to make worthwhile a review of the current status of the law in this area in the light provided by its history. To set the stage, qualified deferred compensation plans under section 401 of the Code, including the requirements for qualification and the tax consequences of the plans so qualified, will be discussed briefly.

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