Opinion ID: 4570917
Heading Depth: 2
Heading Rank: 2

Heading: Qualified for Tax Exemption or Deferment Purposes.

Text: ¶ 21 A retirement plan or arrangement must also be qualified for tax exemption or deferment purposes for it to be exempt under Subsection 20. Even if this Court held the Deferred Bonus is a retirement plan or arrangement, it would not be exempt because a Section 409A plan is not a qualified employer plan for tax deferral purposes. ¶ 22 In the context of employer retirement plans and arrangements, qualified has a specific meaning. For a plan to qualify under the provisions of the I.R.C., it must comply with the provisions of I.R.C. Section 401. See e.g. , 26 U.S.C. § 401(a) (2020) (Requirements for qualification); 26 U.S.C. § 401(k)(2) (2020) (Qualified cash or deferred arrangement). Section 409A deferred compensation plans, like the Deferred Bonus, are eligible for tax deferral until the deferred compensation is paid, but they are distinct from qualified employer plans. The I.R.C. designates Section 409A plans as nonqualified deferred compensation plans, meaning they encompass any plan that provides for the deferral of compensation other than a qualified employer plan. 26 U.S.C. § 409A(d)(1)(A) (2018). Section 409A defines qualified employer plans as follows: (i) A plan described in section 401(a) which includes a trust exempt from tax under section 501(a), (ii) An annuity plan described in section 403(a), (iii) A plan established for its employees by the United States, by a State or political subdivision thereof, or by an agency or instrumentality of any of the foregoing, (iv) An annuity contract described in section 403(b), (v) A simplified employee pension (within the meaning of section 408(k)), (vi) Any simple retirement account (within the meaning of section 408(p)), (vii) Any eligible deferred compensation plan (within the meaning of section 457(b)), or (viii) Any plan described in section 415(m). 26 U.S.C. § 409A(d)(2) (2018). 9 ¶ 23 The list of qualified employer plans in I.R.C. Section 409A(d) is nearly identical to those plans and arrangements listed in Subsection 20 of Oklahoma's exemption statute. Subsection 20 cites specifically to some qualified employer plans and arrangements by their I.R.C. sections: Sections 403(a) & (b), and 457. Others are more generically described: defined contribution plans and defined benefit plans governed by I.R.C. Section 401(a), and individual retirement accounts and simplified employee pension plans governed by I.R.C. Section 408. See 31 O.S.2011, § 1(A)(20). 10 From the use of the word qualified and the qualified employer plans listed in Subsection 20, we conclude Subsection 20 exempts those employer retirement plans or arrangements that are qualified as defined by the I.R.C. ¶ 24 In this matter, Adams and his employer entered into the Restated Agreement to ensure the Deferred Bonus complied with Section 409A. The Section 409A Deferred Bonus is not qualified under the I.R.C. The Deferred Bonus is, therefore, nonqualified and not exempt under Subsection 20.