New deferred comp rules

[Guest wmacdonaldrcg]

What is everyone telling their clients as it relates to the pending (but anticipated) deferred compensation rule changes? I am doing a chat next week to give my views. You can sign up at www.retirementcapital.com.

[mbozek]

What pending rules are u referring to?

[Guest svatty]

He is referring to the two most significant (if passed) pieces of legislation that will impact deferred compensation. The National Employee Savings and Trust Equity Guarantee Act (“NESTEG”) and the American Jobs Creation Act of 2003 (“AJCA”). If you haven't already read these provisions and are responsible for clients that have deferred compensation plans you should read them as quickly as possible (and the 1,000s of articles, law firm memos, etc... may be a good place to start) so that you aren't caught unaware if the legislation does become effective this year.

[mbozek]

I have seen enough proposed legislation to know that only the legislation actually enacted by the sausage factory on the Potomac counts. In the current atmosphere legislation must have bipartisan support to be enacted which doesn't seem to be present. I would be interested in what are the deferred compensation provisions in the AJCA.

[E as in ERISA]

The Senate incorporated the NESTEG provisions into its JOBS bill. So now both versions of the international bills have deferred compensation provisions.

[MGB]

I disagree with mbozek's characterization that we can ignore it until it actually passes. There are numerous grandfather provisions, depending on the date of passage of the bill (or a date chosen during the final deliberations). If you want to do something this year, it ought to be contracted into prior to these dates. Similarly, if you go past one of these dates unknowingly and contract into something that the final legislation comes down on hard, there will be severe tax consequences.

[Guest wmacdonaldrcg]

MGB, I agree with your comments. There are a number of things people should be considering prior to 1/1/05.