Further, for many employers, an important benefit of a life insurance funded
nonqualified plan is that it avoids the qualification requirements that can apply to other types of plans--the employer is free to offer participation selectively, without worrying about the nondiscrimination requirements that apply to other plans.
The audit includes
nonqualified plan administration, human resources, information technology, corporate finance budgets and general corporate operations.
Penalty exceptions available for distributions from a funded
nonqualified plan differ depending on whether the plan was formerly a qualified plan, TSA, or eligible state or local plan.
(3) Cancellation of an existing plan can avoid being characterized as a substitution of benefits if the plan is terminated by the employer, the termination "does not occur proximate to a downturn in the financial health" of the employer, the employer terminates all
nonqualified plans of the same type and the employer does not adopt a similar
nonqualified plan within three years of the plan termination.
The Internal Revenue Service has proposed rules that taxpayers could use to calculate what they owe when nonqualified deferred compensation plans violate
nonqualified plan requirements.
Nonqualified plan distributions are taxable to the distributee, but section 402(b)(2) does not define distributee to include spouses and former spouses.
You have the option of deferring $25,000 under a
nonqualified plan (see sidebar, "Qualified Versus
Nonqualified Plans") or having the money paid out and taxed currently.
M2 EQUITYBITES-May 15, 2018-Voya Financial to Acquire Pen-Cal to Integrate
Nonqualified Plan Services
* A
nonqualified plan. Some employers decide to take the additional step of offering a nonqualified deferred compensation (NQDC) plan, which allows an employer to define the eligible participants as it wishes.
The
nonqualified plan and defined benefit plan have separate communications."
Erek frequently analyzes, drafts and amends both qualified and
nonqualified plan documents, and has substantial experience counseling a diverse roster of clients in connection with plan implementation, compliance and termination-related matters arising under ERISA, the Internal Revenue Code and other applicable laws.
