Informally funding a DCP without Triggering Distribution Requirements
In order for Real Estate Investment Trusts (“REITS”) to maintain their designated tax treatment status, they must meet the annual REIT testing requirements. REITS are required to distribute at least 90% of taxable income in the form of dividend payments to their shareholders. Income realized through the growth of mutual funds – even to pay an employee benefit – must be included in the taxable income calculation, causing significant shortfalls when plan balances rise.

Executive Summary

This article explores how a company can use a deferred compensation plan (“DCP”) as a tool to overcome the executive recruitment and retention challenges produced by “The Great Resignation”.

No, DCPs restore lost savings opportunities and fit in an egalitarian culture.

Many companies say yes. Here are the reasons why:

Issue: Highly compensated employees (HCEs) are in fact discriminated against by 401(k) contribution limits and testing. In 2022, an HCE is defined by the IRS as having total compensation of $135k or more (IRC Section 415).

For most companies, preparing a request for proposals for third-party administrators (TPAs) of nonqualiNed retirement plans is a relatively infrequent occurrence, compared with doing so when seeking TPAs for other types of beneNt plans. For that reason, companies may not follow some best practices for creating such RFPs.

The retirement savings gap in the United States is nothing new – for at least the last decade experts have warned that savings rates are down. Exacerbating the issue is the pandemic of 2020.

One well known, yet unexpected result of the COVID-19 pandemic was the mass exodus of individuals out of city centers. For many, that exodus extended to moving out of state, particularly for those seeking to move from high to low income tax states.

The American Rescue Plan Act of 2021 (commonly referred to as the $1.9 trillion coronavirus aid package) includes a provision that will double the number of the highest-paid executives whose compensation in excess of $1 million…

Are Nonqualified Deferred Compensation Plans the Best Way to Pay for College? In the Winter 2020 edition of Defined Contribution Insights (available here) Plan Sponsor Council of America (PSCA) published the first of a two-part…

A $55 million settlement after 13 years in litigation in the case of Tussey vs. ABB, illustrates the dangers of bundling qualified and non-qualified plans with the same recordkeeper. In an effort to maximize cost efficiency,…

The COVID-19 pandemic has had profound impacts on the day to day business of most American companies. Shelter in place orders and social distancing recommendations, while necessary, also mean that customers are less frequent…