Understanding Employee Benefits

All Businesses, even if not Subject to 162(m), Should Consider Gathering Data to Support Future Deduction of Deferred Compensation under the Grandfather Rule

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As mentioned in a previous blog, the IRS has issued its initial guidance on Code Section 162(m), as modified by the Tax Cuts and Jobs Act.  One important aspect of the guidance is its discussion of preserving deductibility under the transition rule, also known as the 162(m) “grandfather” rule. Under... Read More

Topics: Compensation Questions, Deferred Compensation and 409A, Executive Compensation

Participants in Top Hat Plans Must Exhaust Administrative Remedies

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So-called “Top Hat” plans are nonqualified deferred compensation plans for a select group of management or highly compensated employees. These executive compensation arrangements are exempt from many ERISA provisions, but are not exempt from ERISA’s claims procedure requirements. Therefore, top hat plans must provide a reasonable claims procedure. ERISA compliant... Read More

Topics: Deferred Compensation and 409A, ERISA and Other Benefits Litigation, Executive Compensation

Are Top Hat Plans Entitled to a Discretionary Standard of Review?

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Many years ago the Supreme Court decided that qualified retirement plans that gave their fiduciaries discretion to determine plan benefits were entitled to have their decisions, reviewed by a court under a generous “abuse of discretion” standard. Although that standard may be limited in situations in which the plan administrator... Read More

Topics: Deferred Compensation and 409A, Executive Compensation

It is Always Good to Follow the Plan’s Claims Procedure in Denying a Claim – Part 2

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Some months ago I blogged about an Eighth Circuit Court of Appeals decision involving high ranking executives participating in a company’s long term incentive plan where the executives won their suit under the plan, at least in part, because the employer had not properly followed the plan’s claims procedure. By... Read More

Topics: Deferred Compensation and 409A, ERISA and Other Benefits Litigation

New Internal Revenue Service Regulation Clarify when Property is Subject to a Substantial Risk of Forfeiture

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On February 26, 2014, the Internal Revenue Service published a final regulation clarifying the meaning of “substantial risk of forfeiture” under section 83 of the Internal Revenue Code.  The new guidance will help taxpayers who receive property, other than money, in exchange for services determine when they must recognize the... Read More

Topics: Deferred Compensation and 409A

When is a LLC Profits Interest not a Profits Interest? U.S. Tax Court: “When it is a Capital Interest”*

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On December 2, 2013, the United States Tax Court issued its opinion in Crescent Holdings, LLC et al vs. Commissioner, 141 T.C. No. 15 (12/2/13) wherein it examined the tax rules applicable to transfers of partnership interests as compensation. Crescent Holdings, LLC (“Holdings”) was a limited liability company and the... Read More

Topics: Compensation Questions, Deferred Compensation and 409A, ERISA and Other Benefits Litigation, Executive Compensation, Uncategorized