Ordinarily, this blog does not post on proposed legislation until it gets near the point of adoption and signature. However, the tax legislation bill proposed today by House Republicans would dramatically affect employees, executive compensation, and executive compensation professionals nationwide. We are still wading through the 429 pages, but significant changes include:

  1. Elimination of employees’ ability to defer compensation. The bill would eliminate Code Section 409A effective next year and come up with a new 409B that essentially applies the 457 approach of taxable when vested. The elimination also seems to apply to stock options/SARs (and potentially other equity transfers at least to the extent not covered by Section 83).
  2. Eliminate the performance-based compensation exception to the $1 million deductibility limit under Code Section 162(m). The bill also would apply 162(m) to the CFO.

Hold onto your hat, because there is more to come.