Time and Form of Paument Election

[Guest Buzzman]

The crux of the issue has to do with unfunded health benefits to be provided by companies to senior corporate executives upon separation from service (retirement) or disability. The rights to these benefits are housed in employment agreements or top-hat plans. Some agreements limit the benefits to a number of years, others provide them for life. Since they will be paid in a future tax year beyond the COBRA continuation period, the health benefits would likely be deferred compensation. My question revolves around how to structure the contractual provisions for the "time and form of payment" elections that will be made by the employer with respect to these benefits. For example, in connection with health benefits for life, beyond the COBRA continuation period, should the monthly payment of premiums by the company be characterized as a "life annuity" payable on a certain day each month, with the premiums capped at a certain amount (e.g., cost of premiums of similarly situated executives)? I don't see any guidance in the final regs that deals with this specific issue.

[Steelerfan]

The crux of the issue has to do with unfunded health benefits to be provided by companies to senior corporate executives upon separation from service (retirement) or disability. The rights to these benefits are housed in employment agreements or top-hat plans. Some agreements limit the benefits to a number of years, others provide them for life. Since they will be paid in a future tax year beyond the COBRA continuation period, the health benefits would likely be deferred compensation. My question revolves around how to structure the contractual provisions for the "time and form of payment" elections that will be made by the employer with respect to these benefits. For example, in connection with health benefits for life, beyond the COBRA continuation period, should the monthly payment of premiums by the company be characterized as a "life annuity" payable on a certain day each month, with the premiums capped at a certain amount (e.g., cost of premiums of similarly situated executives)? I don't see any guidance in the final regs that deals with this specific issue.

Check the preamble pp 19248 and See the other thread on this topic. You might be making it too complicated. If the benefits are unfunded, what premiums are you talking about?