Every quarter, I prepare a recap of developments in the benefits and compensation areas for Institutional Investment Consulting. Although many of the items have been reported in previous blog entries, I do a deeper dive for the IIC report. Below is a copy of the most recent report, covering April through June.
The Section 409A rules that apply to nonqualified deferred compensation plans and the very broad definition of such plans has caused this element of executive compensation and benefits to take up a large portion of the resources dedicated to compensation and benefits. This use of resources has often seemed questionable when we consider the limited amount of audit activity that, historically, has been seen in this area. An IRS official recently discussed, at a bar association meeting, an IRS initiative to review some company activity in the area. The review activity will focus on deferral elections and distributions and will involve companies that are already subject to employment tax audits. Fifty companies will be targeted.
While the odds of any company being reviewed are slim, this audit activity is a reason to consider a self-audit of deferred compensation administration. The IRS self-correction procedures are available in most situations and can be used to remedy any noncompliance before the IRS finds the problem.
Each calendar quarter, I prepare a discussion the most important employee benefits and executive compensation developments (it comes out about a month after the quarter ends) for Institutional Investment Consulting, an excellent and highly regarded consulting firm in the qualified and nonqualified retirement plan space. You can get their info at www.iic-usa.com. Here is the full QI 2014 Report.