What is Nonqualified Deferred Compensation and Why Do Companies Use It?

What is Nonqualified Deferred Compensation and Why Do Companies Use It?

Fulcrum Partners. Deferred Compensation News

A nonqualified deferred compensation plan (NQDC) is an unsecured promise made by an employer to pay compensation to key employees at a prespecified time in the future or upon the occurrence of a predetermined event. An NQDC plan is also one of the most powerful tools available to employers for recruiting, retaining, and rewarding key employees.

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5 Mistakes in Life Insurance Planning

Fulcrum Partners. Deferred Compensation News

More than three years ago, we first published an in-depth look at 5 mistakes in life insurance planning. Despite shifts in politics and the economy, tax code changes, and other variables of life, the facts remain the same. In personal life insurance planning, particularly as part of estate planning, even minor oversights can lead to major tax problems. 

Recognizing that efforts to reduce cost in the short term could lead to problems, we’re resharing this important information on 5 key trouble spots in life insurance planning.

Arrest Made in Retirement Plan Fraud Case

Arrest Made in Retirement Plan Fraud Case

Fulcrum Partners. Deferred Compensation News

Earlier this month, a federal grand jury indicted an Orange County, California man on charges related to retirement plan fraud. The U.S. Attorney’s Office for the Central District of California reported that the plaintiff has been charged with three counts of bank fraud and one count of aggravated identity theft after allegedly obtaining the personal information of an unspecified number of Boeing employees.

the publication explains the new provisions which allow enhanced access to plan loans and plan distributions. 

CARES Act Guidance for Plan Sponsors and Participants Updated

Fulcrum Partners. Deferred Compensation News

On June 19, 2020, the Internal Revenue Service (IRS) updated and clarified issues of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) guidance for plan sponsors and plan participants. Issued as Notice 2020-50 (“Guidance for Coronavirus-Related Distributions and Loans from Retirement Plans Under the CARES Act,”) the publication explains the new provisions which allow enhanced access to plan loans and plan distributions. 

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IRC Section 409A v. COVID-19

Fulcrum Partners. Deferred Compensation News

Since the coronavirus pandemic first began to reinvent life in the U.S., we’ve shared numerous updates directed to the topic of IRC Section 409A v. COVID-19. 

Today, courtesy of our friends at Porter Wright, the Deferred Compensation blog addresses questions that employers first raised in March, regarding ways to get money out of their nonqualified plans to participants who may have suffered pay cuts or furloughs. This post also addresses questions regarding equity-based and incentive compensation. As you will see, good intentions could lead to serious consequences under Internal Revenue Code Section 409A. 

Separation from service under 409A

Defining “Separation from Service” under Section 409A

Fulcrum Partners. Deferred Compensation News

The atypical circumstances of recent months have created new situations most organizations have not previously faced. Every employer needs a clear understanding of which workforce reduction circumstances could constitute a “separation of service” and thereby trigger payment of benefits for plan participants covered by a nonqualified deferred compensation agreement (NQDC).

COVID-19 and nonqualified deferred compensation plans

Further Insights on COVID-19 and Nonqualified Deferred Compensation Plans

Fulcrum Partners. Deferred Compensation News

Deferred Compensation News is pleased to provide this Fulcrum Partners report, prepared and originally published by Principal Life, a member of the Principal Financial Group®. With socioeconomic and regulatory landscapes changing day by day and sometimes hour by hour, both plan providers and plan participants are faced with new and unexpected issues.