Deferred and Executive Compensation

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The IRS issued proposed regulations under Section 4960 of the Internal Revenue Code of 1986, as amended (the “Code”), which was added as part of the Tax Cuts and Jobs Act.   The proposed regulations published in the Federal Register on June 11, 2020, largely follow the IRS interim guidance under IRS Notice 2019-09. However,…

The executive and equity compensation plans, agreements, policies and arrangements (collectively, the “Plans”) of publicly traded companies receive close scrutiny from various shareholder advocacy groups during the annual proxy season, which is well underway for 2020.  These groups advise institutional shareholders whether to vote for, to abstain from voting on, or to vote…

With the combination of our nation’s response to COVID-19 and the resultant economic downturn, employers of all sizes face the moral and financial dilemma of evaluating employee headcounts while businesses are grappling with the reality of the current situation.  Many employers are considering furloughs, or other types of approved leaves of absences, to reduce immediate…

When it’s time for tax-exempt organizations such as colleges/universities, museums, and hospital systems to part ways with their senior executives, these institutions are most often considering how to best transition these executives off into the sunset rather than a morass of special tax rules (I will mention Internal Revenue Code citations just once for reference)…

As we previously reported, under the Tax Cuts and Jobs Act, starting in 2018, tax-exempt organizations are subject to a 21% excise tax on (i) remuneration exceeding $1 million paid to a “covered employee” in a tax year, and (ii) any “excess parachute payment” paid to a covered employee.  The IRS has recently published…

Blockchain is a revolutionary technological tool in the way it tracks and stores data, decentralizes information, establishes trust in electronic files, and dispenses of intermediaries. This technology powers virtual currencies, also known as cryptocurrency or virtual tokens. Companies are raising money using “initial coin offerings” (ICOs) and using tokens to compensate and incentivize founders, directors,…

On May 29th, the IRS issued proposed regulations relating to property transferred in connection with the performance of services under Section 83 of the Internal Revenue Code. http://www.ofr.gov/OFRUpload/OFRData/2012-12855_PI.pdf . Most employers are familiar with these rules in the context of the taxation of restricted stock grants and option grants. Under Section 83, property…

The IRS, on December 17, 2010, issued Revenue Ruling 2010-17, which sets forth examples of certain expenses that may be eligible for an unforeseeable emergency distribution from an IRC Section 457(b) deferred compensation plan. Section 457(b) plans generally may permit hardship distributions for unforeseeable emergencies if certain requirements are met. The ruling concludes that residential …

IRS Notice 2010-6 previously provided guidance concerning how to make payment of nonqualified deferred compensation that is subject to the signing of a release complaint with Section 409A. 

Essentially, it provides that a plan may not allow an employee to delay or accelerate the timing of a payment as a result of the employee’s actions …

Last year, the IRS began auditing deferred compensation plans and arrangements under IRC Section 409A, which imposes restrictions on both the terms and the operation of such plans unless an exemption applies. This program began in 2009,  the first year that plan documents had to comply with  Section 409A  in writing (beginning in 2006, plans had to comply…