Qualified and Non-Qualified Deferred Compensation Planning
The attorneys at Carnahan Evans PC, can assist your company with compensation planning and the preparation of employee benefits, including pension benefits and Employee Retirement Income Security Act (ERISA) plans. Our attorneys regularly help clients design, document, and manage these programs, using our experience to ensure that clients meet their goals while also complying with the state and federal requirements that govern employee benefits and compensation planning.
Carnahan Evans can assist you with qualified and non-qualified deferred compensation planning, the two areas of pension benefits. Qualified plans, which offer additional tax benefits on top of regular retirement plans, include the following:
- Money purchase pension plans
- 401(k) plans
- Profit sharing plans
- Employee stock ownership plans (ESOPs)
- Cross-tested plans
- Age-weighted plans
The firm also handles disputes with the IRS that involve qualified plans under the Employee Plans Compliance Resolution System (EPCRS). There are three ways to correct mistakes under this system: a self-correction program (SCP), a voluntary correction program (VCP) with IRS approval, and an audit closing agreement program (Audit CAP). Qualified plans must comply with ERISA. In addition, in order to be considered qualified, these plans must meet several criteria, including the following:
- The company must disclose the plan’s framework and investments to participants upon request.
- The plan must cover a specified portion of employees, and employees who meet the eligibility requirements must be allowed to participate.
- The plan must use a vesting process, in which a participant’s rights to employer-provided assets become non-forfeitable benefits after a specified period of employment.
- The plan cannot discriminate in favor of higher paid employees. Participants’ benefits must be proportionately equal in assignment.
Nonqualified plans are deferred compensation plans that are typically used by employers to provide benefits to a select group of management or highly compensated employees. Nonqualified plans must comply with ERISA, but they also may have to comply with Sections 409A and 457 of the Internal Revenue Code. These plans are sometimes referred to as “top hat plans” or secular trusts.
Stock Option Plans
Another area of compensation planning in which the firm practices is stock option plans. These include incentive stock option plans, employee stock purchase plans, and nonstatutory stock option plans. These plans can be used to reward your employees, linking their interests with those of your company and other shareholders. When designing a stock option program, carefully consider how much stock you are willing to make available, who will receive stock options, and the rate at which employment will grow so that the right number of shares is awarded annually.
For assistance with qualified and non-qualified deferred compensation planning, schedule a consultation with Carnahan Evans PC Contact our law firm today by telephoning us at 417-447-4400, e-mailing us at email@example.com, or completing a contact form online. We look forward to hearing from you.