TCWalker

What's the demand when participant gets a distribution that ignores the last valuation date and reflects a distribution that's reduced by interim fund and admin charges? I mean to ask, does the participant demand a full accounting by the plan adminstrator under ERISA 104(b)(4) and a review and explanation of the benefits determination? An answer is the plan document controls.., but what if the Plan is fairly silent on procedures for disputed calculations? Anyone done / seen this?

nice post

Are you looking for a backroom TPA - anywhere, or a local provider TPA. If the latter, what's local?

I think it's simply too early for practice guides given further 409A guidance is still expected this year. Interim, you might look around on PLI, ABA-ALI, the national comp. , pension & benefit organizations, etc. for seminar/conference tapes and coursebooks added post-Jan 2005 and see what's available on these subjects.

There have been and will be a variety of "solutions" out there to avoid creditor risk. These solutions usually present new practical problems or legal risks. Maybe some work, I suspect most don't; qualified plans certainly work assuming you can afford the contributions cost. Life Ins. has a significant market presence, no doubt. Creditor risk is part of the bargain to defer employer compensation outside 401(a)/501(a); be prepared to weave a tangled web in an attempt to avoid it.

As far as roll-overs, the new employer may offer an exec a new NQDC immediately which be be used to create a current comp offset against the former employer NQDC distribution.

The 2005-1 guidance and opinions of Treasury to date seem resolute that post-2005 terminations are accelerations. Considering the practical problems these rules foster & the comments I suspect Treasury's received, I guess we can speculate there will be some sort of exceptional relief offered in the further guidance expected this year.

Yep, if your talking about retroactively reducing a compensation promise made, but payment deferred, the employer needs advice of counsel and a review of the docs. The scenario you refer to is very common, didn't the employer notice the LI asset wasn't matching the plan liability?

The 162(m) is a deduction limit and is generally an aggregate calculation in the year compensation is employer deducted, regardless of when services are performed. There may be real practical problems in overfunding a SERP, but I don't see an imposed threshold.

Perhaps a bad analysis in the respect wages may be imputed in your hypo. Your "in part " reservation seems to imply it's not entirely speculative or contingent, but taken on its face I don't see that a legally binding right to receive compensation exists until the collection is successful.

Simple PSP termination going in for a DL letter following Co. liquidation. Former employees have requested an immediate distribution. Plan Sponsor wants to hold-back a percentage of balance to the credit until IRS review termination status and issues DL and final trust accounting completed. What percentage hold-back do you think is reasonable/conventional? Thanks.

To answer the original post; it exists. Product installations are often so convoluted and sufficiently off the radar screen I doubt if they'd be accurately recognized in any census count. I remember one survey where the client's key financial advisors where asked if their client had opted for a split dollar funded insurance product and some 25% weren't sure.

I see it differently, though I don't disagree with the above. Time doesn't stand still, and employers need to make decisions about compensation programs, internal communications, how they handle exec and Director questions. I think it's helpful for them to have such a meeting, discuss issues unique to their company's deferred comp and other related comp programs, sketch out the likely scenarios. And, they may wish to take advantage of Q&A21 during March. I guess another way of saying it is, as their advisor you can lay out the gameplan for '05 regardless of what ambiguity & omission may exist with respect to Treasury guidance. If not you....who?

I have thought about it and deem it standard nego. for all relevant agreements on the plaintiff's E-L side. Afterall, the employer is almost always in a better position, better resourced to determine the relevant application of 409A to the employee and influence the terms of the agreement accordingly. Another way of looking at it; if the agreement is later found to have violated 409A the employer is likely to get sued and I suspect the blanket release won't work. Moreover, I guess it calls the integrity of the entire release into dispute. That's where the employer derives a benefit from indemnifying and saving the release.

Hi Kirk: Yes, going forward, but not entirely. If you look at the transitional rule for pre-409A deferrals , Q&A 16(b), I read it as requiring a 12/31/04 existing deferral election and that it apply to legally entitled vested amounts. Since many SO gain deferral elections span future years and include unvested amounts as of 12/31/04 I deduce these elections may not work to defer gain that's unvested as of 12/31/04. Thus, you lose "grand-fathering" on the unvested part of this prior election and you'll need a 409A compliant election for the remainder - and I'm not seeing how the typical plan may comply. So, it's going forward plus past grants where the amounts are unvested as of 12/31/04. I'd like to be wrong on this one, you see it differently?

Yes, I think the 409A problem is the election to defer needs to pre-date the performance and vesting service period, which arguably means pre-dating the grant date, which causes you to pre-dating any enforceable right to future compensation. It begs for relief, but none seen so far.

This arrangement needs to be reviewed for compliance with respect to the constructive receipt and economic benefit doctrines.

No, I thought I heard it slightly different. If the acceleration is automatic under the terms of the Plan, pre Oct 3, 2004, then it's not a material modification upon termination. Once meeting that standard, timing and manner of payment in '05 may be by Er discretion.

I agree Kirk, I would interpret the attitude today as a softening on the "wrap" issue, I suspect in part do to a growing awareness of the prevelance of these arrangements with large employers. I think my notes left it as a matter of "consistency with legislative intent and construction of 409A" subject to future guidance.

And, I think you need to take this a step further an look at a situation where Exec negotiates an on-boarding employment contract that entitles her/him to a defined severance pay at termination. Later, Exec. renegotiates E-K which has the effect of accelerating, improving the severance deal. It better comply with 409A, or someone's, possibly, on the hook for an additional 20%. I think some 409A indemnification language may become the standard in E-Ks.

One that I liked was the comment predicting the end of tandem/pour-back arrangements between 401(k) and NQDC plans. "They're close to being dead if not dead", was one comment I think. (The scenario discussed was a NQDC that pours deferrals into a 401(k) after year-end to max. allowable limits, then a similar dovetail comment was made about arrangements that work in reverse - k to the max, then to NQ.) "Employers are likely to de-couple these arrangement in the future to comply with 409A" was another afterthought. Seems to me if this is simply a matter of the timing rule, there are other fixes. I guess we'll see if this position is re-thought as guidance matures in '05.

And, it looks like they've decided to wait until Monday - second reschedule.

From what I hear, (thanks ABA Joint Committee), IRS guidance goes to press tomorrow.

I think the Act is pretty clear (clearing throat) that operating a plan consisent with current law and subject to a plan without material modification after Oct 3, 2004, and with respect to deferrals made before Jan 1, 2005, is consistent with AJCA. Assuming you conclude a haircut/accelerated withdrawal provision is consistent with current law (pre-AJCA), and it's a provision of the plan prior to Oct. 3rd, pre-2005 deferrals can still operate under those rules - (subject to future clarification...of course) - and assuming you don't screw-up this treatment through subsequent modifications. Anyone disagree?

That was the inital reaction by a few firms, now it appears they are backing away from that position. Time will tell.