162m - extension of "covered employee"

[Guest jfsinger]

The Senate version of the minimum wage bill passed in early '07 contained a provision that would have extended the definition of "covered employee" under 162(m) to include anyone who had ever been a covered employee. Under current law, the defintion only applies to active employees.

If passed, the effect would be to make any annual distributions to covered employees (basically the proxy group) from SERPs or NQDC in excess of $1M non-deductible to the company.

Fortunately, the provision did not make it into the final bill, but I've heard "through the grapevine" that it may rear its ugly head in some bill in the future.

Does anyone out there have better information or an authoritative source that would support this belief?

Thanks,

Joe

[Steelerfan]

I have heard from a reliable source that this legislation will be introduced this month. It will also include the $1 million cap on NQDC per year under 409A, but without the "lesser of" provision previously introduced.

If this passes It will become impossible for companies to payout huge severance packages and take a deduction. I guess they want more money for the war.

[Guest jfsinger]

AALU's webcast yesterday mentioned the $1M cap, but not the 162m provisions. Like you, I've been hearing it will emerge soon. This month, eh?