Re-capturing deferred compensation for limited partners (LLC / LLP partners)
Limited Partners may be subject to self-employment tax
The 23rd June, 2014, IRS ruling on IRC 457A is here: www.irs.gov/irb/2014-26_IRB/ar06.html
September 2014 decision on Section 1402(a)(13) eliminates the 409a option
Both 457A and the anti avoidance rule 409A mean no deferred compensation for working members of a limited partnership.
Section 83 rules on vesting and forfeiture and conversely, settled interests, are a key test of deferral.
The IRS Issues Chief Counsel Advice on Self-Employment Tax September 5th 2014 (ILM 201436049)
The ruling could potentially affect limited partners (including LLC / LLP partners) in every industry.
All comes down to this simple statement ” it is a trade-pay tax now, have the money now. Pay tax later have the money later” which is our IRC 402(b) Foreign Retirement Plan legal framework solution.