IRS Audit Techniques Guide Provides Helpful Reminders for Sponsors of NQDC Arrangements
Greg Gautam • May 6, 2016
Last summer the Internal Revenue Service updated its Audit Techniques Guide (“ATG”) for nonqualified deferred compensation arrangements. While the ATG provides little instruction on how the IRS will review nonqualified deferred compensation arrangements for compliance with Section 409A of the Code, it provides a helpful reminder of some of the other rules applicable to nonqualified deferred compensation arrangements. Among other things, the ATG reminds sponsors of nonqualified deferred compensation plans to be attentive to the following issues:
- Deferred compensation arrangements must be in writing.
- Immediate taxation to a participant could arise if the deferred compensation is not subject to substantial limitations or restrictions (e.g., immediate taxation will arise if the participant can draw on the deferred compensation at any time or if the participant can borrow against the deferred compensation).
- Immediate taxation to a participant could arise if the participant receives an immediate economic benefit with respect to the deferred compensation (e.g., the deferred compensation is set aside in an account in the participant’s name or the deferred compensation is not subject to the claims of the company’s creditors).
- Whether FICA and FUTA taxes have been timely withheld. Unlike income tax withholding, FICA and FUTA taxes are generally required to be withheld when an amount of deferred compensation vests (which usually occurs before the deferred compensation is actually paid). The ATG specifically indicates that the IRS will examine previously filed Form W-2s to determine whether FICA and FUTA taxes were timely withheld.
- A 401(k) plan cannot condition other benefits, including nonqualified deferred compensation benefits, on a participant’s decision to make (or not make) contributions to a 401(k) plan. A deferred compensation arrangement that limits participation to participants who do not make 401(k) plan contributions violates this rule and runs the risk of disqualifying the sponsor’s 401(k) plan.
The full text of the ATG can be found here.
Employee burnout has become an epidemic in today’s modern workplace. So much so that the World Health Organization (WHO) officially recognizes it as an “occupational phenomenon.”1
While many used to consider mounting workplace stress an individual employee problem, these days, it’s become an employer’s responsibility to prevent burnout before it hurts productivity and business performance—not to mention your employees’ physical and mental health.
Luckily, you can prevent burnout from affecting your workforce in several ways. This article will explore the causes and signs of employee burnout and the steps you can take to create a positive work environment where employees feel safe from toxic stress levels.
If you're a small business owner, you may have heard of the acronym PCORI and the fees that come with it. But what is PCORI, and how does it apply to your organization?
Under the Affordable Care Act (ACA), sponsors of self-insured health plans must pay a fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI). PCORI is an independent organization the ACA created to conduct research to help healthcare consumers make better decisions for their specific needs and outcomes. It also performs research related to clinical effectiveness.
Employers offering a self-insured medical reimbursement health plan, such as a health reimbursement arrangement (HRA), must pay this fee by July 31 each year via Form 7201. This fee was initially set to expire in 2019, but Congress extended it through September 30, 20292, due to the Further Consolidated Appropriations Act of 20203.
