A new deferred compensation proposal would maintain the current industry-supported moratorium on Treasury Department guidance on nonqualified deferred compensation, but still raises concerns, says Bob Plybon, president of the Association for Advanced Life Underwriting.
The proposal–an amendment to S. 1637, an international tax bill, was introduced by Senate Finance Committee Chairman Charles Grassley, R-Iowa, and Ranking Committee Democrat Max Baucus, D-Mont.–is similar to an existing proposal but with one key difference, Plybon says.
The new proposal, he explains, does not appear to include repeal of the moratorium on nonqualified deferred compensation guidance under Section 132 of the Revenue Act of 1978.
By contrast, the moratorium would be repealed under the existing proposal, which is part of the National Employee Savings Trust Equity Guarantee (NESTEG) Act (bill number not yet available).
If the moratorium is repealed, Plybon says, the Treasury Department would have broad discretion to begin issuing guidance that could significantly change the current rules applicable to NQDC.
“AALU is opposed to that repeal and has made that opposition known to the Congress,” he says.
But while the moratorium would remain in place in the new proposal, Plybon says AALU still has concerns over some provisions both in NESTEG and S. 1637.