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. Click here to read all recent articles related to the impact of the COVID-19 Pandemic.
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April 03, 2020

Further Insights on COVID-19 and Nonqualified Deferred Compensation Plans

Section 409A

Deferred Compensation News is pleased to provide this Fulcrum Partners report, prepared and originally published by Principal Life, a member of the Principal Financial Group®. With socioeconomic and regulatory landscapes changing day by day and sometimes hour by hour, both plan providers and plan participants are faced with new and unexpected issues.
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April 01, 2020

Does Furlough Constitute a Separation from Service Under IRC 409A

Section 409A

The COVID-19 pandemic has brought operational challenges and financial strain to businesses in every sector. While some organizations have terminated employees, other businesses have been able to furlough some of, or all, their workforce instead. How the employer handles the furlough is important for many reasons, including how the guidelines of Internal Revenue Code Section 409A (IRC 409A) impact decisions made by both employer and employee.
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March 26, 2020

COVID-19 and the Unforeseen Financial Emergency Under IRC 409A

Section 409A

Internal Revenue Code Section §409A (IRC 409A) regulations govern the design and administration of nonqualified executive benefit plans. Nonqualified executive benefit plans have very specific rules on the form and timing of participant distributions and, generally, offer little flexibility on changing the form or timing of the distributions following the submission of the election form. One of the exceptions in the 409A regulations for altering previously submitted distribution elections is addressed under the unforeseeable emergency provisions.
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June 19, 2019

Offsetting the 401(k) Refund with a Nonqualified Deferred Compensation Plan

Section 409A

Download report as a PDF The 401(k) Excess Contribution Solution To help ensure that a 401(k) plan does not favor business owners or other highly compensated employees (HCEs), plan sponsors are required to perform specific nondiscrimination tests. The Actual Deferral Percentage test (ADP) is used to help determine a 401(k) plan’s deferral limits. IRC Section 401(k)(3)(A)(ii) established the ADP test to compare a plan’s average deferral percentage by HCEs to the average deferral percentage of non-highly compensated employees (NHCEs). How successfully a plan passes this test, however, may not be known until the end of each year. If the deferrals of HCEs are too high relative to the deferrals of NHCEs, some of the HCEs may have a portion of their deferrals refunded to them in the next tax year. This is known as an excess contribution or a 401(k) refund. A 401(k) refund immediately becomes unplanned taxable income for the employees, and potentially a lost opportunity to collect company matching dollars for 401(k) savings. Additionally, the employer is at risk of fines and/or potentially losing qualified plan status. Nonqualified deferred compensation plans (NQDC) can be designed to allow plan participants to defer an amount of their base salary equal
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September 25, 2018

Deductible Compensation Under the “New” Sec. 162(m)

Section 409A

As attorney and author of the Executive Compensation blog, Mike Melbinger, looks more closely at the recent IRS guidance on the revisions to Tax Code Sec. 162(m), we continue to share his insights here on Fulcrum Partners News. To better understand the new tax laws and the related guidance recently published by the IRS, review Rethinking Executive Compensation While Awaiting Section 162(m) Guidance, available on the “Resources” page of this website, under the “Whitepapers” tab.  To fully understand your options and your best strategies, contact the experienced team at Fulcrum Partners. Strategies for Creating More Deductible Compensation Under the “New” Sec. 162(m) Publishing date: Aug 28, 2018 Most companies will want to consider changes to the design of their executive compensation programs to preserve the deductibility of compensation in light of the dramatic changes to Code Sec. 162(m) brought by the Tax Cuts and Jobs Act (TCJA). Before making changes, however, most of us were waiting for clarification on the extent to which IRS guidance would allow companies to continue to deduct pre-2018 awards, payments, and benefits under the grandfathered provisions of Sec. 162(m) as they applied before 2018. Now, just in time for the beginning of proxy and compensation
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January 05, 2017

NQDC Rules Changes, Growth, Taxes: 3 Top Blog Posts for 2016

Section 409A

Top 3: NQDC Rules Changes, Growth, Taxes As the new year rolls in and you regroup from holiday parties, bowl games, and the events of a most unusual year, let’s look at what mattered to you most in 2016. Here are the 3 top blog posts on Fulcrum Partners News for the past calendar year: New Section 409A Rules Impact Nonqualified Deferred Compensation Plans (NQDC) Fulcrum Partners Executive Benefits Adds New Financial Consultant Taxes … at the Optimal Time YOUR NEED FOR A NONQUALIFIED DEFERRED COMPENSATION PLAN NQDC Rules Changes: Tax Code Modifications to Sections 409A and 457 Updates on IRS tax law changes related to 409A and 457 tax code topped the list of topics of high interest last year. Fulcrum Partners News updated its readers frequently as the announced changes and the subsequent analysis of the changes unfolded over the summer. In addition to several blogs on the subject, Fulcrum also published this comprehensive report: IRS Proposed Changes Deferred Compensation Rules 2016. Growth: Aggressive Expansion for Fulcrum Partners in 2016 Fulcrum Partners kicked off 2016 with the addition of new Managing Director, Paul Murray in the company’s Fulcrum Partners Los Angeles offices. Throughout the year, the company added Financial Consultants:
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