Jump to content

Search the Community

Showing results for tags 'Private Equity'.

  • Search By Tags

    Type tags separated by commas.
  • Search By Author

Content Type

Forums (Message Boards)

  • Retirement Plans
    • 401(k) Plans
    • Defined Benefit Plans, Including Cash Balance
    • Retirement Plans in General
    • Distributions and Loans, Other than QDROs
    • IRAs and Roth IRAs
    • 403(b) Plans, Accounts or Annuities
    • Cross-Tested Plans
    • Correction of Plan Defects
    • SEP, SARSEP and SIMPLE Plans
    • Qualified Domestic Relations Orders (QDROs)
    • Employee Stock Ownership Plans (ESOPs)
    • Plan Terminations
    • Governmental Plans
    • Plan Document Amendments
    • 457 Plans
    • Investment Issues (Including Self-Directed)
    • Operating a TPA or Consulting Firm
    • Estate Planning Aspects of IRAs and Retirement Plans
    • Continuing Professional Education
    • ERPA (Enrolled Retirement Plan Agent)
  • Issues Spanning Multiple Types of Plans
    • Form 5500
    • Communication and Disclosure to Participants
    • Litigation and Claims
    • Church Plans
    • Securities Law Aspects of Employee Benefit Plans
    • Mergers and Acquisitions
    • Multiemployer Plans
    • International, Expat Benefits
    • Miscellaneous Kinds of Benefits
  • Health & Welfare Plans
    • Cafeteria Plans
    • Health Plans (Including ACA, COBRA, HIPAA)
    • Health Savings Accounts (HSAs)
    • VEBAs
    • Other Kinds of Welfare Benefit Plans
  • Executive Comp; Section 409A
    • 409A Issues
    • Nonqualified Deferred Compensation
  • Miscellany: Other Than Employee Benefits
    • Using the Message Boards (a.k.a. Forums)
    • Humor, Inspiration, Miscellaneous
    • Computers and Other Technology
  • User Groups (Unofficial)
    • ftwilliam.com
    • Relius Administration

Find results in...

Find results that contain...

Date Created

  • Start


Last Updated

  • Start


Filter by number of...


  • Start





Website URL






Found 1 result

  1. I'm having a disagreement with a colleague about a proposed 409A design and wanted some feedback from the forums. Background A private equity firm has proposed a "phantom carry" plan for its non-partner employees. The firm creates funds which invest in companies over the course of, for example, 15 years. Periodically, the fund will pay earnings of those companies out to investors. The payment of these earnings is "carry." Proposed Plan Design An employee is granted a phantom ownership interest in a specified fund managed by the partnership. As with phantom stock, this is not an actual ownership interest and does not dilute the ownership interests of actual owners. Rather, each time the fund pays carry to its investors, the firm pays an amount to the employee equal to what the carry payment would have been for that employee had their ownership interest been real. The firm would pay cash in the next semi-monthly payroll cycle, and there would be no further deferral. The employee's entitlement extends for the life of the fund; potentially beyond termination of employment. Is there Deferred Compensation? As a threshold question, we must ask if there was any deferred comp. When are the amounts earned. If the employee is entitled to nothing until the payment of carry, then there would be no deferred comp as amounts are paid out immediately thereafter. However, if we say that it's the grant of the phantom carry rights that creates the entitlement, then subsequent payment of benefits for years down the road would certainly be deferred compensation subject to 409A. I think we're OK on our end saying it's the latter, but wanted to float this in case anybody felt strongly that there was no deferred comp. Is the Payment Scheme 409A-compliant? Alternate Arguments: No, it is not compliant. In this case, the payment of carry out of the fund triggers payment of NQDC to the participant. Such an event is not a permissible distribution event under 409A. Yes, it is compliant. Each semi-monthly payroll cycle is a stated date, which is a permissible distribution event under 409A. On most of these dates, there is a zero balance in the account, thus no distribution. Following each payment of carry, the NQDC account has a balance which survives only until the next scheduled distribution date (the semi-monthly payroll). Any thoughts/feedback? Thanks.
  • Create New...