Swift Guidance Sought On New Deferred Comp Law
By Arthur D. Postal
The Treasury Department and the IRS are being urged to act promptly in providing guidance on transition issues created by the Jan. 1, 2005, applicability of sweeping new rules dealing with deferred compensation.
The request for prompt action was made in a comment letter sent recently to Treasury and IRS by the American Benefits Council, which represents a large number of U.S. companies, including insurance companies, on pension and other compensation issues before the government.
In its letter, the ABC asked for a prompt response because the new tax rules for all nonqualified deferred compensation plans “require extensive changes to all employers deferred compensation plans.”
The new law dealing with NQDCs was contained in a tax bill passed by Congress and signed by President Bush last month that is titled the Jobs Creation Act of 2004. The ABC letter to Treasury and the IRS notes that the law requires all employers to undertake a comprehensive reviewand potentially make fundamental changesto virtually all compensation arrangements not just those limited to top executives or officers.
The letter notes that supplemental pensions, for example, may cover thousands of employees at a single large employer, many of whom are in the ranks of middle management. Broad-based equity plans, the letter says, also are affected by this law and “may cover most or even all workers at a company.”