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Clients frequently ask if they can provide incentive compensation to their employees and executives in a manner that gives them flexibility and drives performance, but receives coveted capital gains treatment. This usually sounds too good to be true. In most cases, you can defer or sometimes minimize income tax for employees (retirement plans, deferred compensation arrangements, stock appreciation rights, non-qualified stock options), but there is one tool that enables employees to skip income tax, FICA,…
Even though stock options are a commonly used compensation tool, certain issues, such as whether you must/should limit their terms and, if you do, whether you can make changes to their terms after they have been granted, still catch some employers by surprise.…
As you have probably heard by now, the recently enacted Tax Cuts and Jobs Act (the Tax Reform Act) made significant changes to the Internal Revenue Code. With regard to executive compensation, the Tax Reform Act made widely publicized changes impacting public companies and nonprofit entities.  The new law also made changes affecting employer-provided retirement, welfare, and fringe benefits. Nearly all employers, including publicly held, private, and nonprofit, need to understand what is required by…
Sponsors of qualified retirement plans and group health plans may receive tens, if not hundreds, of plan document requests every year. Responding to these requests in accordance with the rules set forth under the Employee Income Retirement Security Act (ERISA) can be fairly straight-forward, especially if the plan sponsor maintains updated copies of all requested plan documents. However, plan sponsors should consider going beyond ERISA’s bare-bones requirements and make it a practice to also provide…
Generally speaking, many employers do not think about the Employee Retirement Income Security Act (ERISA) when it comes to severance, whether at the front end, when employment agreements or policies are negotiated and planned, or at the back end, when termination occurs and the severance is paid. However, a recent case from a trial court in Pennsylvania serves as an important reminder about when ERISA is triggered and why employers should care.…
The Affordable Care Act requires “applicable large employers” (generally, employers with 50 or more full-time employees and full-time employee equivalents) to provide individual statements to their full-time employees and to report to the IRS certain information about their employer-sponsored health coverage. This rule is first effective with respect to coverage offered in 2015. Employers will want to be aware of some of the pitfalls and processes stemming from this first reporting year.…
In 2014, the Internal Revenue Service (IRS) expanded the events that would allow employees to drop their health plan coverage under their employer’s cafeteria plan. As a reminder, the general rule is that once an employee enrolls in his or her employer’s group health plan through a cafeteria plan – which is what allows the employee to pay his or her required premiums on a pre-tax basis – that enrollment is irrevocable for the entire…