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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    ERISA

Date & Time
  • event Date

    Wednesday, December 6, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will provide employee benefits counsel and advisers with a detailed review of the ERISA, IRS, and DOL regulations to consider in structuring deferred compensation plans. The panel will outline the existing regulations, critical considerations for 2023 and beyond, compliance strategies, and key challenges for employers and executives.

Faculty

J. Marc Fosse
Partner
Seyfarth Shaw LLP

Mr. Fosse focuses on all the tax, securities, corporate and accounting issues related to executive and equity compensation arrangements. He works with publicly traded, private, non-profit and government clients in the design, implementation and operation of domestic and international executive nonqualified and supplemental deferred compensation plans, as well as equity-based and other long-term incentive compensation arrangements. He regularly advises clients regarding handling employee benefit matters in corporate mergers, acquisitions, divestitures, initial public offerings and other corporate transactions.

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Molly Callender Hobbs
Partner
Husch Blackwell LLP

Ms. Hobbs focuses her practice on a variety of employee benefit and executive compensation matters. She advises clients on a wide range of employee benefits issues, including the design and implementation of qualified retirement plans, health and welfare plans, and equity compensation arrangements. Ms. Hobbs helps clients navigate the complex legal and regulatory issues relating to the Employee Retirement Income Security Act (ERISA); Patient Protection and Affordable Care Act (ACA); Health Insurance Portability and Accountability Act (HIPAA); Consolidated Omnibus Budget Reconciliation Act (COBRA); and relevant sections of the Internal Revenue Code, including Sections 162(m), 280G and 409A.

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Description

A nonqualified deferred compensation plan allows an employer to make cash payments over a set period to:

  • Motivate employees to meet long-term goals;
  • Retain key employees;
  • Enforce post-termination covenants such as noncompetition, non-solicitation, and confidentiality; and
  • Provide key employees an opportunity to supplement tax-qualified retirement benefits.

However, failure to structure written deferred compensation plans effectively may lead to a wide range of legal issues and adverse tax treatment.

Nonqualified deferred compensation can be paid only upon a permitted payment trigger under Section 409A of the Internal Revenue Code or an exemption under the related Treasury Regulations. Failure to properly define in a written plan document the relevant payment triggers or exemptions can lead to plan document failures that result in immediate taxation of the benefits and severe tax penalties. The IRS has also created strict rules relating to when and how an employee can elect to defer payment of the employee's compensation in the plan document. Once a compliant plan document is created, those adverse tax consequences can also result from failing to make deferrals or payments (i.e., "operational failures") in strict compliance with the plan document's terms.

Another essential factor in drafting a nonqualified deferred compensation plan is whether or not ERISA applies to the arrangement. Counsel must understand the factors that dictate when a plan is subject to ERISA and the pros and cons of such coverage. If the plan is subject to ERISA, counsel must know how to advise clients regarding the scope of the "top hat" group that can participate in the plan and how to evaluate the unfunded status of the plan.

Employee benefits and ERISA counsel must be knowledgeable about best practices for vesting (i.e., substantial risk of forfeiture), enforcement of post-termination covenants (e.g., noncompete), clawback practices, avoiding operational errors under 409A, and other items that may require modification of any current compensation plan.

Listen as our panel discusses current regulations, crucial considerations for 2023 and beyond, compliance strategies, and key challenges for employers and executives.

Outline

  1. Key considerations for employers in structuring deferred compensation
  2. Plan options
  3. Issuance and vesting
  4. Tax treatment; Section 409A and other key tax provisions
  5. Administrative challenges
  6. Evaluating existing plan documents to determine conformity with tax law and necessary modifications

Benefits

The panel will discuss these and other key issues:

  • What are the critical considerations for employers in structuring nonqualified deferred compensation plans?
  • What plan options are available?
  • What issues arise regarding accruals, vesting, and payment timing under certain plans?
  • What are the implications of Code Section 409A and other key tax provisions?
  • What are the administrative challenges and methods to overcome them?