Updated Nonqualified Deferred Compensation Plan Audit Guide

Greg Gautam • August 13, 2021

In June the Internal Revenue Service released an updated Nonqualified Deferred Compensation Audit Technique Guide . This updated Guide replaces the initial Guide published in 2015. While it is too early to say whether the release of the updated guidance signals increased audit activity by the Service in the nonqualified plan space, plan sponsors of nonqualified deferred compensation plans may want to consider reading the updated guidance to re-familiarize themselves with the underpinnings of Section 409A of the Code.  

The updated Guide is written in a conversational style and provides a very good outline of key deferred compensation principles. While it may not provide new information for individuals that regularly practice in this space, it will almost certainly be a good initial read for those that are not familiar with Section 409A of the Code or for those that do not regularly work with deferred compensation programs.  Among other key concepts, the Guide touches on: (i) the complicated FICA tax rules that can be implicated by deferred compensation arrangements (and rules, in our experience, that some plan sponsors are not familiar with), (ii) the “funding” concepts that can apply to deferred compensation arrangements, (iii) the timing of the employer deduction for deferred compensation programs, and (iv) the reporting rules that apply to deferred compensation plans that violate Section 409A.   

Again, while we cannot say for certain that this new guidance will result in increased audit activity, we do think it might make sense for plan sponsors to practice some good hygiene relative to their deferred compensation arrangements and review those arrangements against this guidance, particularly against the “Examination Techniques” section of the updated Guidance.

 

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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