News Archive

"When you are evaluating whether to exercise stock options or sell shares from vested restricted stock/RSUs or an ESPP, you want to consider the thresholds that may trigger higher tax rates for you either this year or next. Assess whether you should defer income into next year or accelerate income into this year. Project your income from equity awards to see whether it will trigger the additional Medicare taxes on high incomes this year or next year."  MORE >>

"The complaint states that the Opinion used a purpose test and determined that the plan's purposes were to provide bonuses and not retirement income, when case law requires an examination of whether the plan has the effect of deferring income to termination of employment or beyond.... [It] is not unforeseeable that the court that previously held that the Morgan Stanley plan is subject to ERISA will invalidate the Opinion holding it is not." [Sheresky v. Chaves-DeRemer, No. 25-8935 (S.D.N.Y. complaint filed Oct. 28, 2025)]  MORE >>

"No MLB team has used deferred compensation contracts more than the Dodgers, with the next closest team being over $800 million behind. In recent years, the Dodgers have garnered the most headlines for this type of compensation structure. But nothing the Dodgers are doing is improper or unusual -- in fact, it is regularly used in the corporate employment world. And it has a history in the MLB."  MORE >>

"While the numbers are eye-popping compared to normal employment agreements, professional athletes' contractual negotiations with their employer, the MLB team, must abide by the same regulations, risks, and benefits as any employment contract. This article addresses how the recent MLB deferred compensation contracts fit into the larger legal landscape of employment contracts and associated risks and benefits to players and teams."  MORE >>

"[P]lan administrators must determine whether a detained worker remains covered under certain company benefit plans -- and when such coverage ceases. [1] 401(k) Plans: Will employee contributions stop? ... Will detention impact vesting service? ... Will detention trigger a distribution event? ... [2] Will detention trigger a loss of health plan coverage? ... [3] Deferred compensation plan ... [4] Action item checklist."  MORE >>

"Executive benefits are receiving a renewed focus from compensation and benefits professionals.... here was a clear increase in the number of companies offering personal, cyber, and home security benefits for CEOs.... 20% of [the] survey respondents are considering adding new benefits in the next two years. The prevalence of cash allowances remains low due to the inefficiencies they can create."  MORE >>

"An important takeaway for an employer-sponsor of a top hat plan is that the plan's language pertaining to plan amendments, or termination of the plan itself, needs to be carefully drafted to preserve the employer's discretion, otherwise the employer could be contractually limited in its rights to take future actions." [Hoak v. Ledford, No. 24-12148 (11th Cir. Aug. 26, 2025)]  MORE >>

"NQDC plans lack some of the safeguards of qualified retirement plans, and they are governed by complex tax rules ... Making decisions strategically, relevant to each plan participant's situation, is essential for achieving optimal results. By making education, resources, and personalized support available to the employees participating in NQDC plans, plan sponsors can help guide participants through this important decision-making process."  MORE >>

"401(k) plan sponsors who also maintain a nonqualified deferred compensation plan [should] ... [1] Determine how the Roth catch-up requirement will be implemented.... [2] Review the terms of any nonqualified plans and assess whether the answers to item 1 above will affect the plans.... [3] Implement plan amendments and administrative procedures that ensure compliance by the 401(k) plan under Code Section 414(v)(7) and the nonqualified plans under Code Section 409A."  MORE >>

"[1] Seeking a 'Scenario of Least Regret' To manage emotions In financial planning ... [2] Dealing with FOMO (Fear Of Missing Out) ... [3] Reframing overconfidence by considering what you have to lose ... [4] Overcoming inertia ... [5] Using a 'legacy anchor position' to provide psychological safety."  MORE >>

"[H]alf of survey respondents see equity compensation as a vital tool to attain retirement goals. According to the research, company stock encompasses nearly one-third of participants' investment portfolios. As a result, 72% of participants believe they'll very likely reach their retirement savings goals, while 44% plan to use the benefit to finance retirement."  MORE >>

"Affirming a district court decision, the appeals court ruled on summary judgment that a plan amendment to cash out participants on plan termination 'adversely affected' the life annuities of some participants, and was therefore unlawful under the plans and ERISA." [Hoak v. Ledford, No. 24-12148 (11th Cir. Aug. 26, 2025)]  MORE >>

"Cases have examined virtually every portion of the phrase 'maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.' ... [W]hile it would appear that the factors of 'primarily', 'select group', 'management' and 'highly compensated' seem to be independent, courts often merge them in their analysis. [This article] will examine each of these factors and the case law addressing them ... [DOL Opinion Letter 90-14A] has led to a split in the federal circuits as to the test for top hat group status.... [A] forum selection clause might be used to avoid the lack of certainty in the area."  MORE >>

"The scope of NQDC subject to FICA taxation is broad, including voluntary deferrals of salary, restricted stock units and performance stock units with deferral features, SERPs, and certain deferred bonuses. Understanding when FICA tax applies to NQDC, and how to take advantage of FICA tax timing rules, can help employers avoid errors when administering their NQDC arrangements."  MORE >>

"When you exercise ISOs, no federal income tax is withheld, and you never owe Social Security and Medicare taxes. What matters for ISO taxes is how long you hold the shares that you acquire after exercise. The best tax treatment occurs when you meet the two holding periods for the stock: at least [1] two years from the date of grant and [2] one year from the date of exercise."  MORE >>

"The court acknowledged that NCR's offering of a lump sum to replace the plan-prescribed annuities was not by itself wrongful.... However, just because NCR could pay a lump sum did not mean that its payments were automatically adequate.... The Eleventh Circuit agreed with the district court that the payments constituted a breach of the plan terms because they 'adversely affect[ed]' the 'accrued benefits' (i.e., the life annuities) of 'any' participant. The word 'any' was key; a lump sum would violate the plan if it 'led to a reduction in the amount of the life annuity of even a single participant.' " [Hoak v. Ledford, No. 24-12148 (11th Cir. Aug. 26, 2025)]  MORE >>

"The well-established concept that the administrator of an ERISA plan should be permitted to interpret the terms of the plan and be subject to a deferential standard of review ... may not actually apply to a 'top hat' plan. Similarly, it is unlikely that an employer's right to interpret an executive compensation agreement or contract would be given that level of deference by a court in the event of a dispute.... The words in the contract actually matter, and any discretionary rights an employer wants to retain should also spell out as clearly as possible exactly what that would involve."  MORE >>

"Affirming the Northern District of Georgia's summary judgment for participants, the court held that NCR's lump-sum payments 'adversely affected' the accrued benefits of at least some participants in violation of the plans' unambiguous terms and that the district court's make-whole remedy was appropriate." [Hoak v. NCR Corp., No. 24-12148 (11th Cir. Aug. 26, 2025)]  MORE >>

"Pursuant to Code Section 83(b)(2), the election must be made not later than 30 days after the date of the Restricted Property transfer (i.e., the date of receipt by the service provider from the company). Late elections are not permitted.... While the online election mechanism will ease administrative difficulties for service providers, timely and proper filing remain critical components."  MORE >>

"A well-structured BOLI program provides banks with a tax-efficient asset that can help offset employee benefit costs while improving long-term financial stability and helping to attract and retain key employees. In fact, now may be one of the best times in the past few years for banks to consider BOLI due to the current higher-interest-rate environment."  MORE >>

"In the FINRA award dated Aug. 8, a three-person panel ruled against former Morgan Stanley rep Patrick T. O'Neill.... In the arbitration, [O'Neill] argued that Morgan Stanley's deferred compensation plan forfeiture for advisors who leave is 'impermissible under ERISA.' " [O'Neill v. Morgan Stanley, No. 24-00358 (FINRA Aug. 8, 2025)]  MORE >>

"For nonprofits, the 21% excise tax on executive compensation over $1 million has been dramatically expanded from applying to only the top 5 highest-paid employees to all current or former employees earning over $1 million. For public companies, the expansion of Section 162(m) deduction limitations creates new incentives to adopt nonqualified deferred compensation (NQDC) plans as tax-efficient compensation strategies."  MORE >>

"Historically, service providers had to mail a physical copy of their Section 83(b) elections to the appropriate IRS office within 30 days of the transfer. In a much-anticipated move, the IRS now allows Form 15620 to be completed and filed online through its website."  MORE >>

"A recent Sixth Circuit Court of Appeals case reminds us that these plans must satisfy unique compliance requirements to continue to remain exempt from such ERISA provisions. This case determined that plan participants did not have a state law fiduciary duty claim because ERISA preempts state laws, provided that the top hat plan complies with certain requirements[.]" [Aldridge v. Regions Bank, No. 24-5603 (6th Cir. Jul. 17, 2025)]  MORE >>

"[T]he higher cap on the SALT deduction comes with ... a phaseout for those with yearly adjusted gross income (AGI) exceeding $500,000.... [P]lanning ideas to try to hold your AGI below the phaseout zone ... include maximizing contributions to qualified retirement plans ... putting salary or bonuses into any nonqualified deferred compensation plan that's available; and exploring eligibility for other retirement or pension plans that defer income.... [E]valuate whether to avoid triggering more income, such as with Roth IRA conversions, nonqualified stock option exercises, and asset sales."  MORE >>