New IRC 457(f) Deferred Compensation Rules for Nonprofits: Preparing for Major Changes Ahead

Reviving 457(f) Plans: Short-Term Deferrals, Rolling Risk of Forfeiture, Deferral of Current Compensation and More

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, December 14, 2016

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide nonprofit organization advisers and professionals with a critical first look at the new IRS guidance on deferred compensation for nonprofit and exempt organization executives and employees. The panel will discuss critical structuring changes to Section 457(f) and define the additional opportunities and challenges for exempt organization directors and professionals to consider in structuring deferred compensation plans.

Description

In July 2016, the IRS released long-awaited guidance on deferred compensation for exempt organization employees. The proposed regulations under Section 457(f) provide both clarity and planning opportunities for nonprofit entities in structuring deferred compensation plans for executives, while offering some deviation from Section 409A rules on recognition events.

The proposed regulations update and supercede the prior guidance in key areas related to determining when a substantial risk of forfeiture (SRF) occurs that would require an employee with a deferred compensation plan to recognize income. The new rules decouple 457(f) SRF events from stricter Section 409A provisions, and provide for a “rolling risk of forfeiture,” which allows employees to add or extend the deferral period for SRF purposes.

Additional components of the new regulations include more lenient standards than those found in Section 409A for determining whether a noncompete covenant represents a lapse in SRF requiring income recognition, as well as permitting short-term deferrals in some circumstances. These new rules provide exempt organization employers with a flexibility in structuring deferred compensation plans that is not available for their for-profit counterparts.

Listen as our experienced panel provides a critical first look at the new Section 457(f) regulations and offers practical guidance on implementing the new guidance.

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Outline

  1. Previous 457(f) guidance
  2. New guidance deviation from Section 409A treatment
    1. Noncompete covenants
    2. “Rolling risk of forfeiture”
    3. Benefit exchanges
    4. Deferral of base salary
  3. Planning opportunities and risks

Benefits

The panel will discuss these and other important topics:

  • How do the new regs interpret participation in a noncompete covenant in terms of whether an SRF exists?
  • How do the new regulations differ from Section 409A rules on “rolling risk of forfeiture?”
  • What provisions do the new regs make for short-term deferrals on existing plans?
  • How do the new regulations allow for deferral of current base salary and under what circumstances?
  • What plans are not covered by the new regulations?

Faculty

Oringer, Andrew
Andrew L. Oringer

Partner
Dechert

Mr. Oringer is co-chair of his firm's ERISA and Executive Compensation group, and leads the firm’s...  |  Read More

Smith, Stefan
Stefan P. Smith

Partner
Locke Lord

Mr. Smith has extensive experience in employee benefits and executive compensation law. He works with both public and...  |  Read More

Fosse, J. Marc
J. Marc Fosse

Director
Trucker Huss

Mr. Fosse focuses on all the tax, securities, corporate and accounting issues related to executive and equity...  |  Read More

Thomas M. Asmar
Thomas M. Asmar

Counsel
Skadden Arps Slate Meagher & Flom

Mr. Asmar advises public and private companies, as well as private equity funds, on all employee benefits and...  |  Read More

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