Avoiding Nonqualified Plan Traps: Key Considerations for ERISA Counsel and Employers

Correcting 409A and 457(f) Errors, Proposed Income Inclusion Regulations, Group Carveout Plans, Split-Dollar Life Insurance Plans

Recording of a 90-minute premium CLE video webinar with Q&A


Conducted on Thursday, April 8, 2021

Recorded event now available

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Program Materials

This CLE webinar will guide benefits counsel and employers on critical challenges in designing and implementing nonqualified plans. The panel will discuss the application of Section 409A rules and correcting Section 457(f) errors, the implications of the "income inclusion" regulations, and issues stemming from group carveout plans and split-dollar insurance plans, as well as offer methods to ensure the development of an effective strategy for key employees.

Description

A nonqualified plan is a tax-deferred, employer-sponsored retirement plan used for executives and key employees. These plans are not subject to the full gambit of rules under ERISA as qualified plans but have a unique mix of rules, regulations, and potential drawbacks to navigate.

Bonus plans, group carveout plans, split-dollar insurance plans, and nonqualified deferred compensation plans (NQDCP) are ripe with potential pitfalls. One of the main issues that arise in disputes relating to these plans is whether or not the plan is subject to ERISA. To ensure that a nonqualified plan is exempt from ERISA, benefits counsel and employers must carefully consider various critical items in drafting or amending plans and other agreements. In either case, employers must ensure that they follow ERISA claims procedures to minimize penalties and liability.

Section 409A applies to most NQDCPs. Distinguishing what is and what is not deferred compensation subject to Section 409A and documenting compliance is critical in designing and implementing NQDCPs. Furthermore, navigating procedures in correcting errors for plans under Section 457(f) is essential to avoid unintended liability.

Listen as our panel discusses Section 409A rules' application, correcting Section 457(f) errors, the implications of the "income inclusion" regulations, group carveouts, split-dollar insurance, and other essential matters.

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Outline

  1. Pros and cons of nonqualified plans
    1. Legal and regulatory framework
    2. Administrative challenges
  2. Section 409A
  3. Group carveout plans
  4. Split-dollar insurance plans
  5. Deferred Compensation for Tax-Exempts
  6. Best practices for effective nonqualified plan design and implementation

Benefits

The panel will review these critical issues and more:

  • What are the legal and administrative challenges of nonqualified plans?
  • What are the potential pitfalls of Section 409A?
  • What are group carve-out and split-dollar life insurance plans, and how can they be used as incentives for key employees?
  • What are the unique challenges facing tax-exempt 457(f) plans?

Faculty

Bernstein, Susan
Susan E. Bernstein

Special Counsel
Schulte Roth & Zabel

Ms. Bernstein is special counsel in the New York office of Schulte Roth & Zabel LLP, where she has been advising...  |  Read More

Pizzano, Dominick
Dominick Pizzano, CEBS

Employee Benefits Consultant
Milliman

Mr. Pizzano's responsibilities include the drafting and review of all types of qualified plans, including both...  |  Read More

Powers, Andrea
Andrea Bailey Powers

Shareholder
Baker Donelson Bearman Caldwell & Berkowitz

Ms. Powers represents employers in all aspects of executive compensation and employee plans matters, including the...  |  Read More

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