Prior to 1984, payments under a nonqualified deferred compensation plan were credited
as wages when received. However, if these payments were related to retirement, they
were specifically excluded from the definition of wages under an exclusion for “payments on
account of retirement.”
The 1983 Social Security Amendments (P.L. 98-21) eliminated this exclusion and changed
the year in which payments under a nonqualified deferred compensation plan are credited
as wages. Currently, such payments are credited as wages either in the year services
are performed or, if later, when there is no longer any substantial risk of forfeiture
(see RS 01401.090).