TCWalker

Well between us I think we've covered the subject. I appreciate your thinking. My bottom-line caution remains: if someone is giving legal advice ( and I include tax ) to the public and she/he is not a licensed attorney in that jurisdiction, she/he is one attractive defendant for the plaintiffs' attorney who intakes the malpracticed client. In this scenario I would be interested to see what the non-attorney's E&O would pay, if anything.

This is TCW, back with my correct handle: No mjb, I think we are mixing apples, oranges and pears in these examples. CPAs, real estate agents/brokers, licensed insurance professionals, tax preparers, enrolled agents and many others have special licenses and exemptions for lawyer-like functions of their jobs. For example, CPAs routinely advise clients on tax issues, I agree. From what I see, they stop short of advising a client whether they can might prevail in a tax court dispute or from accepting professional liability for the soundness of their legal / regulatory analysis and advice - without suggesting a legal review. The Florida case involving the Patent Office is interesting, but keep in mind the US Patent Office maintains a certiifcation course that both attorneya and non-attorneys must pass to practice before the agency - I might agree it just isn't a State Bar issue for Florida. Representing a client of a non-legal professional service in front a federal agency on a distinct issue might well be non-UPL, but that's not equivalent to a non-lawyer going into business of "giving of tax advice, tax planning and opinions on the IRC and Treas Regs," to the general public. Legislative and agency accommodations, and universal non-enforcement have made it all very muddy, and there has been momentum from advocates to gut these UPL statutes in the name of cheapening and broadening access to representation. I just don't see any grants given to non-lawyers of the right to practice what has traditionally been legal services, other than these very narrow accomodations reflecting the maturing of certain regulated professional services industries or federal agency activites. So I say, these narrowly drawn accommodations and exceptions don't offer much protection if a local DA or the damaged client's plaintiffs attorney decides to employ the UPL statute in a prosecution against a non-lawyer selling legal services.

Well, I may have missed your real question, but in my experience the traditional arrangment was the participant elects the max. permissible (k) contribution from the prior year's NQPlan deferral following the ADP test(s) run at year-end, hence there is no fall-out to cash.

Deferred comp.

Seems to me if you could use the 30 day rule on a successor plan you could adopt a new plan every year with annual election dates well into the service period.

I'll be the sole dissenter, I think it's service contract income - nothing deferred. It seems rational to me to base the contract rate on a % of prior compensation as a benckmark, as long as the service contract performance by the payee isn't a sham.

I think the scenario inandofitself is a 409A election.

I think they would be wise to compare against a tax-qualifed DB or weighted DC plan; talk to a competent Q-plan actuary.

I think death is pretty much an irrevocable separation from service.

Wasn't this a hypo investment? I think the risk isn't on those participants, it's on the Trust or employer.

Nice catch, Thanks

"September 29, 2005 JS-2956 Treasury and IRS Propose Regulations on Deferred Compensation WASHINGTON, DC -- The Treasury Department and IRS today issued proposed regulations on deferred compensation under section 409A. Section 409A governs plans and arrangements that provide nonqualified deferred compensation to employees, directors or other service providers. These regulations implement new provisions established by the American Jobs Creation Act (AJCA). The proposed regulations announced today identify which plans and arrangements are covered under section 409A, outline operational requirements for deferral elections and permissible timing for deferred compensation payments made under the rules. The rules also extend the deadline for documentary compliance with the new rules to December 31, 2006. The deadline was initially December 31, 2005. The proposed regulations provide a framework for implementing the requirements of section 409A, taking into account the numerous comments received from the public on Notice 2005-1, issued last December. The effective date proposed for the regulations is January 1, 2007. Taxpayers may rely on the proposed regulations until final regulations are effective. REPORTS A copy of the proposed regulations [or http://www.treas.gov/press/releases/reports/reg15808004.pdf ]

Generally, I have the impression that Er decisions, executive communication and document work has been postponed until the next round of meaningful guidance.

I think you'll find that guidance under the issue of "diversity".

Yeah, I heard it's 250 pages and could be issued almost immediately. It sounds like it's a coin-toss whether it gets issued or postponed as Treasury enters stand-by mode to support the enactment whims of Congress.

So, we're past 9/15/05 and BNA reportedly quotes an IRS Chief Counsel as saying toward end of year for guidance, and the speculation is growing there will be delayed effective dates, (agreed it may mean extended good faith compliance and delaying amendment dates). Katrina is the culprit, I guess the IRS saw it coming back in May. Thanks Mark for the post.

So....what's the problem? I suspect someone will earn respectable legal fees for delivering these answers, at least enough to cover his or her E & O premiums.

OK, anyone have some straight skinny, or decent speculation, on what's going on with Treasury guidance and the 409A effective dates? I saw an industry org. at-issue memo asking Treasury to postpone certain 409A effective dates due to the lack of guidance. Personally, I was expected to see more from Treasury before summer and I don't like having projects on perma-hold. The reality is some NQDC sponsors are going to be headed for enrollment meetings in Sept - Oct with issues undecided, designs unfinished and questions unanswered. Ggrrr.

My experience, the exception clause is unusual.

OK, I'll bite. I'll guess the controversy is the vesting scheme looks like an discounting scheme, that is to say the option price and isn't actually fixed at time of grant, it's effectively offering a contigent discount by increasing the option grant later at the fixed FMV. So if this analysis has any merit, any "vesting" in excess of 100% would trigger 409A because the exercise price becomes effectively less than the FMV of the stock at time of grant.

Thoughts, OK - I certainly would think so. There may be liability to the Plan from individuals indemnified by the company, or by the company, but I think the Plan is directly liable for the denied participant claim. If the Plan is injured by a judgment and found at fault, I think the DOL would look to see if any fiduciary duties were breached and may seek a recovery on behalf of the Plan, and I suspect the company picks up the tab.

I don't know why you need a local lawyer. Why are you going to be traveling back and forth - you want to buy him (her) lunch? Try NELA's website, http://www.nela.org . I bet you can find an ERISA, Benefits, Employment Law, Disability or Public Employees lawyer that isn't too far away and will work with you via fax and email for the most part.

OK - Maybe it's a stupid question, but. Anyone know how to structure a 401(a) plan distribution due to disability that will afford the employee to receive the monies on an income tax-free basis? I thought the general rule is tax treatment of disability benefits atbrutable to employer contributions that were not includible in the gross income of the employee or contributions made by the employee on a pre-tax basis are always subject to income taxation, (perhaps excepting a few types of insurances). Thanks.

"Good faith" compliance with a reasonable interpretation of Section 409A (2005). And who could doubt that smile?

SERP? Election? Didn't you mean to say a non-qualified compensation deferral plan? (A SERP is more often the label for a non-elective plan.) Ongoing, pay attention to the fiscal year of the employer and the timing of the participant's deferral election.