Equity and Executive Compensation

There’s a Lot to Consider When Designing and Operating Deferred Compensation Plans for Executives of Tax Exempt Organizations—Part 2

SCOTT E. GALBREATH, October 17, 2023 This article is the second in a series. Part 1 appeared in the Sept 2023 Benefits Report (download PDF here). Those working with 457 plans may also be interested in Scott E. Galbreath’s October 31 webinar: Deferred Compensation Plans for Tax Exempt Organizations —The Tricks and Treats of 457 Plans […]

There’s a Lot to Consider When Designing and Operating Deferred Compensation Plans for Executives of Tax Exempt Organizations—Part 1

SCOTT E. GALBREATH, September 28, 2023 On July 14, 2023, the Internal Revenue Service (the “IRS”) issued Notice 2023-54 (the “Notice”), providing much-welcomed guidance and transition relief relating to certain required minimum distributions (RMDs). Specifically, the Notice provides the following: Tax exempt organizations have unique considerations when it comes to compensating executives. The most obvious […]

FICA Tax Withholding and Reporting for Section 457(b) and 457(f) Nonqualified Deferred Compensation Plans

J. MARC FOSSE, July 28, 2022  Administering withholding and reporting of taxes under the Federal Insurance Contributions Act (FICA) for nonqualified deferred compensation plans maintained under Section 457 of the Internal Revenue Code (the “Code”) can be complex for many tax-exempt organizations. Employers frequently need assistance in setting up proper procedures and pay codes to […]

Nonqualified Deferred Compensation Plans Must Be Amended by December 31, 2020, to Remove Mandatory Payment Delays due to 162(m) Nondeductibility

J. MARC FOSSE, October 8, 2020  The amendments to section 162(m) of the Internal Revenue Code (“Code”) under the Tax Cuts and Jobs Act (TCJA) can create a payment trap for nonqualified deferred compensation plans with a mandatory payment delay of amounts that are not deductible under Code section 162(m). The proposed Treasury Regulations under […]

IRS Issues Interim Guidance under Notice 2019-09 on Section 4960 Excise Tax for Tax-Exempt Organizations and Certain Governmental Entities

J. MARC FOSSE and YATINDRA PANDYA, June, 2019     The Internal Revenue Service (IRS) has issued interim guidance in Notice 2019-09 (the “Notice”) regarding the application of section 4960 of the Internal Revenue Code (the “Code”). Code section 4960 imposes an excise tax on applicable tax-exempt organizations (ATEOs) that pay covered employees either compensation in […]

IRS Issues Initial Code Section 83(i) Guidance – Mostly Good News

J. MARC FOSSE, December 10, 2018 The IRS has provided initial guidance in Notice 2018-97 (the “Notice”) about certain statutory requirements for private corporations granting options and restricted stock units (RSUs) which they intend to treat as qualified equity grants under section 83(i) of the Internal Revenue Code (the “Code”). If an option or RSU […]

Tax-Exempt Organizations Face New Tax Penalty on Excess Compensation — Due Diligence and Minimization

J. MARC FOSSE and SERENA AISENMAN, February, 2018 The “Tax Cuts and Jobs Act” added a new 21% tax penalty on “excess compensation” paid by most tax-exempt organizations to their top-five highest compensated employees. The penalty is found under section 4960 of the Internal Revenue Code (the “Code”) and it ties the amount of the […]

New Section 83(i) of the Internal Revenue Code — Qualified Equity Grant Programs Permit Employees to Elect to Defer Income Taxes on Stock Options or RSUs

J. MARC FOSSE and ANGEL L. GARRETT, January 11, 2018 New section 83(i) of the Internal Revenue Code (the “Code”) permits eligible private corporations1 to adopt qualified equity grant plans for issuing stock options or restricted stock units (RSUs) to eligible employees to obtain “qualified stock” (as defined below) in exchange for the performance of […]

Disability Claims Regulations Delayed to April 1, 2018

YATINDRA PANDYA and JAHIZ NOEL AGARD, December, 2017 On November 24, 2017, the Department of Labor (DOL) delayed the applicability of the final rule which revises the regulations governing disability benefit claims (the “Final Rule”) to April 1, 2018, from the original January 1, 2018, effective date. Published in the Federal Register on December 19, […]

Tax Reform Provisions Affecting Employer-Provided Compensation and Benefits

J. MARC FOSSE, December 27, 2017 The Tax Cuts and Jobs Act (the “Act”) recently signed into law affects many employer-provided benefits and employee compensation, beginning as soon as next week. This alert highlights the affected benefits and provides a short summary of how the Act will change the tax treatment of those benefits and […]

Section 409A Relief for Tax Payments from Section 457A Plans

J. MARC FOSSE and YATINDRA PANDYA, December 20, 2017 On December 8, 2017, the Internal Revenue Service (the IRS) released Notice 2017-75 (the “Notice”), which provides limited relief from cer­tain penalties under section 409A of the Internal Revenue Code (the “Code”) for tax payment distributions from a Code section 457A nonqualified deferred compensation arrangement (a […]

UPDATE: Latest Senate Markup of the “Tax Cuts and Jobs Act” Strikes Provisions that Would Have Drastically Changed Nonqualified Deferred Compensation Arrangements, While Retaining Revisions to 162(m) Limits on Executive Pay

J. MARC FOSSE, November 16, 2017 The November 14, 2017, markup of the Tax Cuts and Jobs Act (the “Act”) released by the Chairman of the Senate Finance Committee deletes section III.H.1 of the November 9th Senate proposal. That section would have replaced section 409A of the Internal Revenue Code (the “Code”) with Code section […]

Executive Compensation Programs Are Still on the Chopping Block in Senate Version of “Tax Cuts and Jobs Act”

J. MARC FOSSE, November 13, 2017 Shortly after the House version1 of the Tax Cuts and Jobs Act (the “Act”) was amended to delete all provisions relating to sweeping changes to executive compensation programs, the initial Senate proposal for the Act was released, putting these provisions right back on the table. Although the Act is […]

Nonqualified Deferred Compensation Plans May Need to Be Updated for Revised Claims Regulations Relating to Disability Determinations

J. MARC FOSSE, August 2017   While nonqualified deferred compensation plans (“Nonqualified Plans”) are generally exempt from most of the substantive provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), Nonqualified Plans are still subject to ERISA’s enforcement provisions, including claims regulations implementing section 503 of ERISA. For that reason, a Nonqualified Plan must […]

Tax-Exempt Entities and State/Local Governments Have New Flexibility in Designing Annual and Long-Term Bonus Incentive Plans

JAHIZ NOEL AGARD, October 2016 This client alert discusses how tax-exempt entities and state/local governments (“eligible employers”) can take advantage of the new rules in the Internal Revenue Service (“IRS”) proposed regulations (issued on June 22, 2016) regarding Internal Revenue Code (“Code”) Section 457(f) (the “Proposed Regulations”) to design more flexible and easier-to-administer annual and […]

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