TN 16 (11-23)
Wages are paid when actually or constructively received or when an economic benefit is derived. There are special rules for determining when wages are paid under a deferred compensation plan (see RS 01401.060).
Actual receipt occurs when an employee actually receives their pay in cash, check, or other medium. Any amount withheld or deducted from the employee's pay, whether mandatorily or at the employee's option, is considered actually received.
Constructive receipt occurs when the employee could have received the payment earlier than the time of actual receipt.
EXAMPLE: Salary checks mailed on the last day of a pay period are constructively received on that day if employees are permitted to pick up their checks personally. If employees may only receive the salary checks by mail, there is no actual or constructive receipt until the pay period in which the checks are received.
Constructive payment is when wages are credited to the employee's account or otherwise set apart so that they may be drawn upon by the employee at any time (see RS 01401.040).
An economic benefit occurs when an employee gains an absolute right to wages in the form of a fund which has been irrevocably set aside for the employee and is beyond the reach of the employer's creditors. For example, payments from a deferred compensation plan that is funded through a trust (that does not qualify for IRS tax-exempt status) may be considered paid even if neither actual nor constructive receipt has occurred. This issue should occur infrequently.