Salary Deferrals in the Time of COVID-19

Marvin "Bucky" Swift • March 31, 2020

As the saying goes, “drastic times call for drastic measures” and, from an economic standpoint, these are drastic times. To fight the battle to stay in business many employers are considering a wide range of alternatives, including employee furloughs, layoffs and terminations. While some employers may also consider sweeping salary reductions, other employers may consider reducing current salaries with the promise to pay those salaries in the future. Employers taking this latter approach must understand that deferring salaries from 2020 to 2021 (or to some other future year) can create compliance issues under Section 409A of the Internal Revenue Code (“409A”).

409A is a comprehensive statute governing “deferred compensation,” which the IRS broadly defines as the current right to receive compensation in a future year. And yes, moving compensation from 2020 to 2021 (whether initiated by the employer or the employee) implicates 409A, unless the deferred salary is paid no later than March 15, 2021.

An employer considering this alternative may simply want to defer the salary until the COVID-19 pandemic is resolved or business gets back to normal. However, if the salary deferral is subject to 409A, the deferral can only be paid on one of the following events: separation from service; death; disability; fixed date; hardship; or change in control. Violating 409A results in the employee including in current income the amount of the salary deferral plus an additional 20% tax.

An employer considering salary deferrals due to the COVID-19 pandemic should carefully consider how 409A could impact that decision.

Employee burnout: what it is and how to prevent it

By Mardy Gould • May 24, 2024
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.

Form 720 and PCORI fee FAQs

By Mardy Gould • May 23, 2024
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.
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