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<< Older News  |  September 20, 2021

News

All News > Nonqualified Plans

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Stock Options and RSUs: Costly Mistakes to Avoid
myStockOptions.com Link to more items from this source
Sept. 9, 2021

"[1] Not understanding your grant or how it works.... [2] Not understanding the taxes or letting taxes drive decisions.... [3] Forfeiting your grant in job termination.... [4] Not having a strategic plan for the shares.... [5] Getting bad advice on financial and tax planning."

Tags: Nonqualified Plans  •  Stock Options

A Reminder of What IRS Examiners Will Look for Regarding NQDC Plans
PLANSPONSOR; free registration may be required Link to more items from this source
Aug. 26, 2021

"An updated audit technique guide discusses the doctrines of constructive receipt and economic benefit, as well as IRC Section 409A, to explain when NQDC deferrals are included in employees' income."

Tags: 409A Plans  •  Nonqualified Plans

Trends in Executive Compensation Litigation
Thomson Reuters Practical Law Link to more items from this source
July 30, 2021

"This Article discusses trends in executive compensation-related litigation relating to: [1] Failures to adequately disclose perquisites paid to named executive officers (NEOs) as required by Item 402 of Regulation S-K ... [2] Compensation paid to a controlling shareholder relating to the individual's role as an executive or board member ... [3] Executive misconduct ... This Article also recommends actions for companies to consider in light of the recent executive compensation-related litigation."

Tags: Executive comp  •  Nonqualified Plans

NQDC Plans Aim to Mitigate Risk of Key Employee Early Retirement
Hall Benefits Law Link to more items from this source
July 28, 2021

"Thanks to soaring stock market and real estate values, older workers who can afford to do so are calling it quits.... [T]he number of people who plan to work past the age of 67 fell to a record low of 32.9% in March 2021. While early retirement can be a boon for more affluent employees, this trend can be potentially crippling for companies that rely on senior executive talent to run their businesses."

Tags: Nonqualified Plans

Basics of Equity Compensation Programs
Moss Adams LLP Link to more items from this source
July 27, 2021

"Many companies, optimistic about these benefits, start equity compensation programs without sufficient planning. They're often surprised to discover the nuanced accounting requirements involved -- and the operational systems needed for a program to run smoothly."

Tags: Nonqualified Plans

Key Compensation Issues in Preparing for an IPO or SPAC Merger
Meridian Compensation Partners, LLC Link to more items from this source
July 23, 2021

"[It] is often the case that SPAC target companies do not have mature and fully market-competitive compensation structures. They depend on the SPAC to establish processes to prepare for a public company compensation structure, often an enormous challenge for young companies to achieve in the span of just a few months. The primary area of focus is often the company's equity grants in connection with the transaction and beyond, as further detailed later in this article."

Tags: Executive comp  •  Nonqualified Plans  •  Stock Options

Nonqualified Plans Important Incentive in Return to Normalcy
MassMutual Link to more items from this source
July 21, 2021

"When properly structured, NQDC can be an important tax management and supplemental retirement planning tool for participants.... Companies can set themselves apart from competitors by communicating to newly hired and potential high value recruits that the NQDC and executive benefit plans offered are informally funded with reserved assets."

Tags: Nonqualified Plans

Do the New IRS Nonqualified Plan Audit Guidelines Mean Section 409A Audits Are Coming?
Foley & Lardner LLP Link to more items from this source
[Guidance Overview]
July 21, 2021

"[T]he 2021 Guide is ... clearly intended to be used as a reference to assist IRS auditors as they audit nonqualified deferred compensation plans.... What we do know is that [1] audit activity in this area has declined in recent years, but that the IRS has requested substantial budget increases, [2] Congress may be inclined to encourage more enforcement in this area to help fund certain other government initiatives, and [3] with this new 2021 Guide, the IRS is prepared to audit more nonqualified deferred compensation plans."

Tags: 409A Plans  •  Nonqualified Plans

IRS Updates Nonqualified Plan Audit Technique Guide: is a New Enforcement Initiative on the Horizon?
Porter Wright Morris & Arthur LLP Link to more items from this source
[Guidance Overview]
July 19, 2021

"This latest update to the NQDC guide contains much more detailed guidance than the prior version. That is noteworthy because President Joe Biden and many members of Congress have been proposing to increase the IRS's budget in order to provide more resources for audit initiatives. Could a new executive compensation enforcement initiative be on its way? If so, employers need to be prepared with the following steps."

Tags: Nonqualified Plans

Executive Comp Considerations Before Taking the Company Public
Alvarez & Marsal Link to more items from this source
July 2, 2021

"Companies considering or preparing to go public should ensure they are prepared with appropriate and market-based compensation structures. Regardless of whether a company enters the public realm via a [special purpose acquisition company (SPAC)] business combination or the more traditional IPO route, the way a company should prepare from a human capital and an executive compensation perspective is very similar."

Tags: Executive comp  •  Nonqualified Plans

Editor's Pick Text of IRS Publication 5528: Nonqualified Deferred Compensation Audit Technique Guide (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
July 1, 2021

23 pages, rev. Jun. 2021. "A NQDC plan examination should focus on when the deferred amounts are includible in the employee's gross income and when those amounts are deductible by the employer. The examiner should also address if deferred amounts were properly taken into account for employment tax purposes. The timing rules for income tax and for FICA/FUTA taxes are different. This guide discusses each of these concerns[.]"

Tags: Nonqualified Plans  •  Plan Audits by Government Agencies

IRS Updates Audit Guide for Nonqualified Plans
Groom Law Group Link to more items from this source
[Guidance Overview]
July 1, 2021

"The 2015 Guide only provided a limited discussion of the legal authority applied in the context of an audit. The 2021 Guide provides an expanded discussion of the legal authority surrounding nonqualified plans, with a particular focus on the longstanding constructive receipt and economic benefit doctrines."

Tags: Nonqualified Plans  •  Plan Audits by Government Agencies

Judge Denies Dismissal of SERP Benefits Claim Suit
planadviser Link to more items from this source
June 24, 2021

"The judge found that the defendants did not substantively respond to the plaintiff's repeated communications about his claim, except for sending a delayed letter -- outside the relevant 90 day window -- indicating that the 'senior vice presidents' had voted to deny the plaintiff's claim. 'Therefore, [the] plaintiff has exhausted his administrative remedies,' [the judge] concluded." [Delauter v. The Nissan Supplemental Executive Retirement Plan II, No. 20-609 (M.D. Tenn. Jun. 18, 2021)]

Tags: Nonqualified Plans

Creating Highly Effective Nonqualified Deferred Compensation Plans
Voya Link to more items from this source
June 17, 2021

"[1] Provide NQDC plan investment options that differ from your workplace retirement plan.... [2] Informally fund your NQDC plan--and let participants know about it.... [3] Leverage the flexibility to create tailored NQDC plans.... [4] Prioritize education as part of the plan."

Tags: Nonqualified Plans

Non-Qualified Deferred Compensation Plans: Class Year or Account-Based?
Fulcrum Partners LLC Link to more items from this source
June 14, 2021

"Account-based plans are generally viewed as simpler for participants to understand and manage. Account-based structures also fit well within the framework of IRC Section 409A, which focuses on proper administration of distributions. Class-year structures offer flexibility due to the greater number of sub-accounts created. However, this also produces more complexity for distribution management."

Tags: 409A Plans  •  Nonqualified Plans

New Tax on 'Excessive' Compensation of Tax-Exempt Executives Imposed at Not-So-Excessive Levels
Jones Walker Link to more items from this source
[Guidance Overview]
May 17, 2021

"Now that final guidance has been issued, [applicable tax-exempt organizations] should ... consider adopting the following strategies: [1] Maximize retirement income for covered executives.... [2] Consider implementing excise tax cutbacks.... [3] Consider adopting split dollar life insurance arrangements.... [4] Review current compensation programs to determine extent of potential liabilities as well as potential exemptions."

Tags: Executive comp  •  Nonqualified Plans

Retaining Key Talent When There's a Rush to Retire
Fulcrum Partners LLC Link to more items from this source
May 13, 2021

"Filling lower-level jobs left open by post-pandemic workplace transitions is a challenge. But what if your organization loses some of its key talent to early retirement? How well can your company function if multiple top executives all find the idea of an early exit very appealing? Creatively designed nonqualified deferred compensation plans (NQDC) serve the objectives both of employers and executives in a variety of ways."

Tags: Coronavirus (COVID-19)  •  Nonqualified Plans

NQDC Plan Participation Continues to Grow
Fulcrum Partners LLC Link to more items from this source
Apr. 21, 2021

"[R]oughly 66 percent of nonqualified deferred plan eligible employees participated in employer NQDC plans in 2020, in contrast to the 53.4 percent of employees who participated in their organization's NQDC plan per the PSCA's 2018 study.... NQDC plan participation documented by the 2020 study, accounted for deferral of, on average, 10.5 percent of the employee's base pay."

Tags: Nonqualified Plans

March to the Beat of Your Own Drummer: Amazon’s Executive Compensation Practices
McCarter & English Link to more items from this source
Apr. 13, 2021

"Salaries at Amazon are extremely modest. ... While executive officers receive vacation, medical, 401(k) benefits and other benefits generally available to all Amazon employees, they are not provided with benefits under nonqualified deferred compensation or supplemental executive retirement plans or cash severance programs."

Tags: Executive comp  •  Nonqualified Plans

In Nonqualified Benefit Plans, One Size Does Not Fit All
BankDirector.com Link to more items from this source
Apr. 12, 2021

"[W]hen consultants design SERPs solely for retirement income -- because the decision-makers are concerned about retirement -- they often make the mistake of designing a plan that fails its primary goal: attracting, retaining and rewarding key talent."

Tags: Executive comp  •  Nonqualified Plans

Biden's Tax Plan and Its Potential Impact on Corporate Retirement Plans
River and Mercantile Link to more items from this source
[Opinion]
Apr. 1, 2021

"For plan sponsors with existing NQDC plans, ... now is a good time to review their plan's structure in anticipation of greater demand ... If corporate tax rates rise, [the authors] foresee profitable cash generative companies looking to increase funding to existing defined benefit plans."

Tags: Nonqualified Plans  •  Retirement Plan Design

Editor's Pick ESPPs: Tax-Return Mistakes to Avoid
myStockOptions.com Link to more items from this source
Mar. 31, 2021

"[1] Paying tax too early on the discount.... [2] Not filing Form 8949 after an immediate sale of ESPP shares at purchase.... [3] Directly using what appears as the cost basis on your Form 1099-B.... [4] Paying the wrong tax on the discount.... [5] Using the wrong price when there is no lookback.... [6] Paying tax twice on the discount."

Tags: Nonqualified Plans  •  Stock Plans

Editor's Pick Tax-Return Errors to Avoid with Employee Stock Purchase Plans
Bruce Brumberg, JD, via Forbes; subscription may be required Link to more items from this source
Mar. 24, 2021

"[1] Paying tax too early on the discount.... [2] Not filing Form 8949 after an immediate sale of ESPP shares at purchase.... [3] Directly using what appears as the cost basis on your Form 1099-B.... [4] Paying the wrong tax on the discount.... [5] Using the wrong price when there is no lookback.... [6] Paying tax twice on the discount."

Tags: Nonqualified Plans  •  Stock Plans

Tax Returns Involving Nonqualified Deferred Comp: What You Need to Know in 2021
myStockOptions.com Link to more items from this source
Mar. 23, 2021

"Distributions from NQDC plans, as well as salary income, are now reported as part of income on Line 1 of Form 1040.... The IRS has still not finalized the Section 409A rules on W-2 reporting."

Tags: Nonqualified Plans

A Look at the NQDC Market
PLANSPONSOR; free registration may be required Link to more items from this source
Feb. 24, 2021

"Data on number of plans, participants and liabilities by nonqualified plan type, and a listing of the largest providers of section 409A plans and section 457 plans."

Tags: 409A Plans  •  457 Plans  •  Nonqualified Plans


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