Monday, April 20, 2009

Summary of Intersection of 409A and 457A

LINK From JP Morgan

"Both sections 409A and 457A will, in some cases, apply to the same nonqualified deferred compensation. When this occurs with regard to short-term deferrals, taxes under 457A will be considered a payment under both sections. And, in general, until Treasury and the IRS provide us with further guidance, taxes on earnings under 457A will be considered to pay the taxes under 409A as well."

Thursday, April 16, 2009

Further Reflections On NFL Tax Issues and 409A

From the National Football Post

"Since almost every NFL signing bonus of any significance is paid out over a period of at least a couple of years, 409A could have had dramatic consequences if the full value of these deferred payments could be taxed in the year negotiated, not earned, potentially affecting tens of thousands of dollars, even hundreds of thousands, depending on the size of the contracts. Those affected contracts were brought into compliance through language vetted by the NFL Management Council and the NFLPA to allow for the taxation of deferred guaranteed money in the year of receipt rather than in the year of negotiation of the contract. So the problem was solved, although not without additional headaches for players’ tax advisers."

Friday, April 10, 2009

ERISA Industry Committee Seeking Changes to 409A Regulations

ERIC Files Comment Letter

Sends Attorney to Testify on Proposed Changes

Comment Letter

"The comments are divided into the following six general topics:

Assumptions for calculating amounts deferred;

The date as of which amounts deferred during a taxable year must be calculated;

Safe harbors to calculate the premium interest tax;

Determining whether a previously included amount has been permanently forfeited or otherwise lost;

Code Y reporting; and

Other miscellaneous issues."

Friday, April 3, 2009

409A Deferred Comp Plans in Bankruptcy

Rethinking Executive Comp Plans When Cash is Tight

"As the U.S. economy sinks deeper into recession, cash-strapped small business are confronting tough decisions about the life insurance-funded, non-qualified executive compensation packages they’ve established to reward and retain their top talent. To ease the financial strain on their balance sheets, sources tell National Underwriter, firms may need to explore a range of options, from restructuring the plans to a suspension of funding. For many, the one option that isn’t available is to do nothing."

Thursday, April 2, 2009

Follow Up On NFL Compensation Issues (off topic)

Law Review Article Discussing Sign On Bonus Tax Issues and Solutions

Do NFL Signing Bonuses Carry a Substantial Risk of Forfeiture within the Meaning of Section 83 of the Internal Revenue Code?