Friday, May 13, 2011 | Kenneth A. Mason
Filed under:
Nonqualified Plans, Deferred Compensation, Plan Administration
Most sponsors of Section 401(k) plans are familiar with the standards for allowing active employees to withdraw their elective deferrals on account of “financial hardship.” The same hardship withdrawal standards apply to Section 403(b) deferrals. However, far more stringent in-service withdrawal standards apply to nonqualified deferred compensation arrangements that are subject to Code Section 409A. These “unforeseeable emergency” standards apply to Section 457(b) plans, as well. In its Revenue Ruling 2010-27, the IRS has helped to define the scope of these unforeseeable emergency standards.
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Thursday, November 18, 2010 | Kenneth A. Mason
Filed under:
Nonqualified Plans, Deferred Compensation, Executive Compensation
Employers and their executives should note a year-end deadline for correcting certain failures to comply with the “documentation” requirements of Section 409A of the Internal Revenue Code. As explained in our March 2010 article, IRS Notice 2010-6 created a program for correcting such failures, but with many of its generous transitional rules expiring on December 31, 2010.
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Monday, March 01, 2010 | Robert A. (Rob) Browning
Filed under:
Nonqualified Plans
The American Jobs Creation Act of 2004 changed the landscape of compensation arrangements by adding Section 409A of the Internal Revenue Code, which imposes strict operational and documentation requirements on nonqualified deferred compensation arrangements. Section 409A applies to any plan, agreement, or arrangement that creates (in a given tax year) a legally binding right to compensation that is payable in a later year. Consequently, Section 409A applies to a wide variety of arrangements, including supplemental retirement programs, bonus plans, incentive compensation arrangements, employment agreements, severance agreements, and equity compensation plans.
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Wednesday, November 26, 2008 | Kenneth A. Mason
Filed under:
Nonqualified Plans
As noted repeatedly in the pages of this publication, the IRS has established a deadline of December 31, 2008, for coming into full documentary compliance with the requirements of Section 409A of the Internal Revenue Code. By this date, all plans and arrangements providing “deferred compensation” in return for the provision of services must be amended to comply with the various constraints imposed by Section 409A.
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Tuesday, July 01, 2008 | Robert A. (Rob) Browning
Filed under:
Nonqualified Plans
Employers are reminded that all plans, arrangements or agreements (other than tax-qualified retirement plans) that defer compensation must fully comply with the final regulations under Internal Revenue Code Section 409A by December 31, 2008!
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Tuesday, January 01, 2008 | Kenneth A. Mason
Filed under:
Nonqualified Plans
Coming close on the heels of Notice 2007-78 – which extended the deadline for amending nonqualified deferred compensation arrangements to reflect the requirements of Internal Revenue Code Section 409A – the IRS has now issued three additional Notices granting further relief in this area.
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Tuesday, May 01, 2007 | Kenneth A. Mason
Filed under:
Nonqualified Plans
The final Section 409A regulations address a concern raised by many employers and their advisors after reading the proposed regulations: the uncertainty concerning the effect of provisions in employment agreements, severance plans, and the like entitling an executive to receive deferred compensation on a voluntary resignation for “good reason.” Under the final regulations, a document incorporating such a “good reason” provision is far more likely to qualify for an exception to the Section 409A rules than it was under the proposed regulations.
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Sunday, April 01, 2007 | Kenneth A. Mason
Filed under:
Nonqualified Plans
As we go to press, the IRS has just issued final regulations under Section 409A of the Tax Code. As expected, these regulations require that nonqualified deferred compensation arrangements be amended to comply with Section 409A – or to fall within an exception to the 409A rules – by December 31, 2007.
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Sunday, April 01, 2007 | Gregory L. Ash
Filed under:
Nonqualified Plans, Executive Compensation
Since Congress enacted sweeping new legislation governing nonqualified deferred compensation arrangements two years ago (in the form of Tax Code Section 409A), the focus of the benefits community has been on how those arrangements are treated for tax purposes. In light of the publication of final Section 409A regulations this month, this undoubtedly will continue to be the case. But in the midst of the tax discussion, it is important not to lose track of the other federal law that governs these arrangements – ERISA.
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Sunday, October 01, 2006 | Kenneth A. Mason
Filed under:
Nonqualified Plans
With the December 31, 2006, amendment deadline fast approaching – and with no final regulations in sight – the IRS has again extended the deadline for documentary compliance with the requirements of Section 409A of the Internal Revenue Code. Notice 2006-79 extends this deadline by another full year, to December 31, 2007.
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Friday, September 01, 2006 | Julia M. Vander Weele
Filed under:
Nonqualified Plans
A nonqualified deferred compensation plan can be an important part of an employer’s overall compensation program. Unlike qualified retirement plans, which limit benefit amounts and require broad coverage, nonqualified plans provide a virtually unlimited opportunity to defer income and may be targeted to key individuals. Additionally, nonqualified plans are generally exempt from ERISA’s fiduciary, funding, and vesting requirements.
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Sunday, January 01, 2006 | Kenneth A. Mason
Filed under:
Nonqualified Plans
Sponsors of nonqualified deferred compensation plans are now beginning to understand the substantive constraints imposed on such plans by Tax Code Section 409A, which was enacted as part of the American Jobs Creation Act of 2004 (AJCA). At the same time, however, sponsors and administrators of nonqualified plans have been struggling to understand and apply the AJCA’s new tax reporting obligations
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