Parent and Subsidiary liability for deferred comp

[Guest rgfleming]

I have a client who wishes to move all obligations and liabilities for a book entry nonqualified deferred compensation plan from each of its subsidiaries to the holding company. The subsidiaries contain all the employees and operations. The holding company has no employees or operations.

Can the client move all obligations and liabilities to pay NQDC to the holding company with assets that are only subject to the reach of the holding company's creditors? Subs have no liability and each subs general assets are not reachable to pay obligation or subject to holding company's general creditors.

[david rigby]

Probably not an ERISA question. Advise seeking competent legal advise with corporate counsel.

[TCWalker]

I can think of a number of problems, one of which is how & where the deductions will ultimately be taken under 162(m), & the imposition of tax under 61(a) if it strategy actually worked, etc..... pax's suggestion to involve legal counsel, tax counsel is very sensible.

[lbell]

This situation creates a problem both from the creditors claims issue and the consideration for taking the responsibility for the def comp/ What is the consideration ? You probably should also check the underlying def Comp agreemnt you may be triggering a taxable event to the employee even though they donot have actual receipt of the funds,