Deferred Compensation News and Updates

Deferred Compensation News brings you the latest information and insights on 409A nonqualified deferred compensation; institutional COLI, BOLI, and ICOLI; tax-and cost-efficient non-COLI funding strategies; low-cost tax managed non-COLI asset/liability designs; executive benefits benchmarking; succession planning and timely issues of executive pay and benefits. 
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August 16, 2016

White Paper: 409A and 457 Updates That Will Impact Your Deferred Compensation

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White Paper: 409A and 457 Updates That Will Impact Your Deferred Compensation IRS Proposed Changes Deferred Compensation Rules 2016 409A and 457 Updates The US Treasury Department and the Internal Revenue Service have issued proposed guidance and new regulations on deferred compensation arrangements under Sections 409A and 457 of the Internal Revenue Code. These actions were published June 22, 2016, in the Federal Register. Follow these links to read, in full, the proposed regulation clarifications and changes that apply to Section 409A and to Section 457. Since the June 22, 2016, Internal Revenue System announcement of the proposed rules and modifications, numerous articles have been published by reputable sources, offering opinions and interpretations regarding the changes and application of the changes. It is important to note that sources have not been in wholly consistent agreement in interpreting the new guidelines. The proposed regulations help define what is, and what is not, to be treated as payment of compensation for purposes of Section 409A. Other specific areas in which the new regulations provide helpful insight include, but are not limited to the following: The separation of service for employees that move to contractor status, with the specification that when an individual transitions from status
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June 28, 2016

Flexibility Offered for Deferred Compensation Plans of Tax-Exempt Organizations, Government Agencies

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The article posted below was published by JD Supra Business Advisor, and authored by Brian Pinheiro and Diane Thompson of Ballard Spahr LLP. Originally released June 23, 2016, the article looks at two sets of proposed regulations under Sections 457 and 409A of the Internal Revenue Code. The U.S. Treasury Department has issued the proposed regulations, relating to deferred compensation plans of state and local governments and tax-exempt organizations, including: Health Systems Universities Foundations Other nonprofit entities The article includes an in-depth look at the highlights of the new proposed regulation. A public hearing on the proposed changes is scheduled for this fall. As Pinheiro and Thompson observed, it is important that: All state and local government employers, and all tax-exempt employers, should review their deferred compensation, severance, and paid-time off arrangements in light of the new proposed regulations. Some adjustments to the arrangements may be needed to maintain compliance, but there also may be opportunities to take advantage of the unexpected flexibility contained in the proposed regulations.” You can read the full text of the article below.
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March 22, 2016

What’s New for the 2016 Tax Return Season?

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2016 Tax Return Season: New Information PONTE VEDRA BEACH, FL– (March 22, 2016) –  This article on your 2016 tax return and tax planning tips for nonqualified deferred compensation plans is reprinted with permission of myNQDC.com, a respected source of information, content, and tools on nonqualified deferred compensation. This article contains a number of  links to additional content available only to members of  myNQDC.com, which offers a free basic individual membership, premium memberships, and corporate licensing. As you work on tax returns involving nonqualified deferred compensation, here’s a quick take on issues to keep in mind.  What’s new for the 2016 tax return season? Here’s a quick take on some new developments to be aware of when your tax return involves nonqualified deferred compensation: For high-income people who participate in NQDC plans, the increased tax rates on ordinary income, capital gains, and dividends, along with the return of phaseouts on personal exemptions and itemized deductions, continue to affect tax strategies and tax-return reporting. These rate hikes took effect during the 2013 tax year and make deferral of income more attractive than ever. The IRS has still not finalized the Section 409A rules on W-2 reporting. Therefore, your company does not need
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December 09, 2015

Deferred Compensation: A Fresh Perspective

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A Fresh Perspective on Deferred Compensation Forbes Magazine contributor, Steve Parrish, took an interesting look at the benefits of deferred compensation in an article titled, “Delaying Today’s Compensation Could Pay Off In The Future.” Parrish  explained, in simple terms, what distinguishes qualified plans from nonqualified plans. He pointed out that many workers may not be familiar with either concept and that those who are aware of nonqualified deferred compensation plans, may incorrectly believe such plans to be relevant to only earners at the highest levels. As the article’s author identifies, the idea behind delayed compensation is hardly new: “Nonqualified deferred compensation (NQDC) plans have been around since the legendary boxer Sugar Ray Robinson signed a deal with the International Boxing Club of New York in 1957. And yet this popular compensation planning tool is still misunderstood.” See the December 7, 2015 edition of Forbes/Entrepreneurs for Steve Parrish’s complete article, including  case studies on these four earning scenarios: A professional-level employee supplements his retirement income A key employee wants ‘a piece of the company pie’ ‘Tier Two’ employees get their own incentive plan A tax-efficient succession plan for father and daughter  
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October 23, 2015

IRS Announces 2016 Pension Plan Limitations

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IRS Announces 2016 Pension Plan Limitations; 401(k) Contribution Limit Remains Unchanged at $18,000 for 2016 Ponte Vedra Beach, FL — (October 23, 2015) —  The IRS announced yesterday that there will be no cost of living adjustments for qualified pension and defined contribution plans.  The important retirement plan limits for 2016 and 2015 are summarized below: 2016 2015 Elective Deferral Limit for 401(k) and 403(b) Plans $18,000 $18,000 Age 50 Catch Up Limit for 401(k) and 403(b) Plans $6,000 $6,000 415 Defined Contribution Plan Limit $53,000 $53,000 Qualified Compensation Limit $265,000 $265,000 Highly Compensated Employee Limit $120,000 $120,000 Key Employee Officer Compensation Limit $170,000 $170,000 Social Security Taxable Wage Base $118,500 $118,500 Read the complete IRS announcement here: IRS Announces 2016 Pension Plan Limitations (October 21, 2015) About Fulcrum Partners LLC : Fulcrum Partners LLC (www.fulcrumpartnersllc.com) is one of the nation’s leading and largest executive benefits consultancies. A team of experienced industry professionals, the consultants at Fulcrum Partners focus on an integrated approach to the design, financing, and plan administration of executive benefits programs. Fulcrum Partners LLC is a wholly independent, member-owned firm dedicated to helping organizations enhance their Total Rewards Strategy. Founded in Ponte Vedra Beach, FL in 2007, today the company has
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October 14, 2015

Wells Fargo Deferred Pay Plan Allegedly Violates State Law

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Wells Fargo Deferred Pay Plan Attacked This past May, Wells Fargo settled a lawsuit covering advisors in California and North Dakota. According to court documents, under terms of the settlement, Wells Fargo paid a total of $5.1 million to 133 advisors. Now, Wells Fargo Advisors is again facing similar allegations in a lawsuit seeking class-action status that was filed against the firm in the U.S. District Court for the Southern District of Texas. Alleging that forfeiture provisions in Wells Fargo’s Performance Award Contribution and Deferral Plan are too broad and ill-defined, the lawsuit claims that the deferred compensation plan offers to management and other highly paid Wells Fargo employees, including financial advisors, violates state laws. The claim, according to Financial Advisor magazine, states: …financial advisor forfeits his rightfully earned deferred compensation if he becomes ‘associated’ (not even employed) with ‘any financial services businesses’ (which is not defined anywhere in the Plan), anywhere in the world, and irrespective of whether that financial advisor actually competes [with Wells Fargo] in his or her new employment, for a period of three years.” David Siegel, Senior Counsel at Ajamie LLP in Houston, who represents the plaintiffs, said, “The plan does not have the “reasonable limitations that Texas law would require”
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October 12, 2015

Review Compensation Arrangements Relating to Unvested Rights Now

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Now’s the Time to Review Compensation Arrangements Relating to Unvested Rights As the calendar year winds down, reviewing Compensation Arrangements related to unvested rights is a timely move. In an online article published last week by JD Supra and written by Kimberley Anderson, Jamison Klang, and Marianne O’Bara of Dorsey & Whitney LLP, the authors point out that as the end of the year approaches, correction of errors could save costly 409A penalties. The article looks at several common provisions that make an arrangement subject to Section 409A review that should be considered in advance of the year-end. As a reminder of the timeline and possible penalties, the writers point out:  If the document failure is found now, it can be corrected on or before December 31, 2015, and if no change-of-control occurs before December 31, 2015, the correction will not entail a penalty or additional tax.  This correction relies on the 409A “income inclusion regulations” that assess penalty taxes based on vested amounts on a year-by-year basis.” You can read the article in full at JD Supra Business Advisor or contact the offices of Fulcrum Partners LLC for assistance regarding compensation arrangements, issues of 409A compliance, executive benefits, and Total Rewards.
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July 28, 2015

IRS Releases the Nonqualified Deferred Compensation Audit Techniques Guide

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IRS Releases the Nonqualified Deferred Compensation Audit Techniques Guide PONTE VEDRA BEACH, FL — (July 28, 2015) The Internal Revenue Service issued its Nonqualified Deferred Compensation Audit Techniques Guide in June of this year. According to this guide, the IRS examinations of nonqualified deferred compensation plans will primarily focus on: (1.) the timing when deferred amounts are includible in the employer’s gross income; and (2.) when those amounts are deductible by the employer. The IRS will also examine if deferred amounts were properly taken into account for employment tax purposes. Many of Fulcrum Partners’ clients have requested a full copy of this Audit Techniques Guide. We thought it helpful if a copy were distributed to all clients, prospective clients, and friends of Fulcrum Partners. A pdf copy of the Audit Techniques Guide can be obtained by clicking here. Fulcrum Partners offers unparalleled expertise in assisting nonqualified plan sponsors with the operational compliance issues that are the subject of these proposed IRS audits. You may find detailed information here on Fulcrum Team members and office locations. About Fulcrum Partners LLC: Fulcrum Partners LLC is one of the nation’s leading and largest executive benefits consultancy. It’s consultants focus on an integrated approach to the
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July 16, 2015

Compensation Clawback Policies: SEC Proposes New Rules

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With Securities and Exchange Commission (SEC) proposed rule changes regarding compensation clawback policies potentially leading to Nasdaq, the NYSE, and other national securities exchanges and associations adopting listing standards applicable to listed companies, Fulcrum Partners recommends that listed companies plan for the review of existing incentive-based compensation arrangements and any other plans or agreements that are affected by incentive compensation, such as deferred compensation plans or supplemental executive retirement plans. The goals of such review would include determining whether there is an existing contractual right to recover compensation and to consider whether to modify the arrangements to permit recovery in the future. The following article released earlier this month by Foley and Lardner looks at these proposed rule changes. Below is an excerpt from “SEC Proposes Rules on Compensation Clawback Policies,” written by Joshua A. Agen and Leigh C. Riley. You can read the full article at Legal News: Employee Benefits & Executive Compensation SEC Proposes Rules on Compensation Clawback Policies On July 1, 2015, the Securities and Exchange Commission (SEC) proposed rules relating to compensation clawback policies. The rules, if adopted, would implement the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd Frank) by directing national securities exchanges and associations, such as the NYSE and Nasdaq, to adopt listing
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Featured image for “8 Key Questions for IRC § 409A Compliance – The Gatekeeper to Structuring Effective Deferred Compensation Arrangements”
June 22, 2015

8 Key Questions for IRC § 409A Compliance – The Gatekeeper to Structuring Effective Deferred Compensation Arrangements

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8 Key Questions for IRC § 409A Compliance The Gatekeeper to Structuring Effective Deferred Compensation Arrangements Executive benefits consulting firm, Fulcrum Partners LLC, is pleased to distribute this AALU Washington Report, “8 Key Questions for IRC § 409A Compliance – The Gatekeeper to Structuring Effective Deferred Compensation Arrangements,” to its clients and friends. This continuing series of articles is intended to provide in-depth insight into trends, events, and issues that impact the design and operation of nonqualified executive benefit plans. Do you feel confident that you know and fully understand the regulatory compliance issues that must be addressed when implementing or operating a nonqualified executive benefit plan? As you are already aware, §409A has revolutionized the world of NQDC arrangements by imposing rigorous standards governing deferral elections under, and distributions from, NQDC arrangements. This report offers you a summary of the compliance considerations to be addressed by asking and answering the eight key questions you should consider in structuring deferred compensation arrangements and also provides you a checklist for issues of 409A compliance. To further ensure your plan complies with the Internal Revenue Code § 409A regulations, seek guidance from an experienced executive benefits consulting firm, such as Fulcrum Partners.  You can read the complete article below
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