Distress Termination: Even if a company is reorganizing in bankruptcy, PBGC works for the pension plan to continue through reorganization.
However, a company in financial distress may voluntarily terminate a pension plan if: To learn more about distress terminations, please see our Distress Terminations FAQs.
The final regulations make clear that Section 409A potentially applies to any payment to which a service provider has a legally binding right that may be received in a future year.
It is likely, for instance, that Section 409A would apply to salary and bonus deferrals, severance payments, employment agreements with termination payments, certain equity arrangements and certain incentive compensation plans.
When a plan has formally terminated and the plan sponsor has submitted a Form 5310, Application for Determination for Terminating Plan, the IRS will review the application.
Many times, we ask for additional information before we issue a favorable letter, and the review process may last for several months.
With the downturn in the economy and increasing rates of bankruptcy and insolvency, both employers and employees have given second thought to the wisdom and future viability of existing NQDC plans. The first step is to determine whether an arrangement to defer compensation is an NQDC plan as defined under Sec. If so, the second prong of the test determines whether NQDC plan benefits are subject to a substantial risk of forfeiture.
has a legally binding right to deferred compensation to be paid in a year after that in which it was earned.
Involuntary Termination: PBGC may terminate a pension plan – even if a company has not filed its own plan termination – if: By law, PBGC must terminate a plan if it cannot pay benefits currently due.
To learn more about involuntary terminations, please see our PBGC-Initiated Terminations FAQs.
Physicians, however, are not only focused on current income but on the accumulation of retirement income under favorable taxation rules.
The NQDC plan is different from other deferral-type of benefit plans such as qualified employer plans (e.g. For instance, participants in the NQDC plan may be limited to a group of highly compensated employees, such as physicians, without including other employees in the plan.