Tax-exempt organizations that pay excess parachute payments or remuneration in excess of $1 million for a taxable year to “covered employees” need to be aware of a recently announced IRS compliance strategy.
On November 5, the IRS’s Tax Exempt & Government Entities Division (TE/GE) released its Fiscal Year 2021 program letter and new compliance webpage. According to the webpage, one area of TE/GE focus for the 2021 fiscal year is compliance with Internal Revenue Code section 4960. Section 4960 imposes a 21 percent excise tax on “excess remuneration” (remuneration that exceeds $1 million for a taxable year) and “excess parachute payments” paid by an applicable tax-exempt organization to certain “covered employees” during a taxable year. Section 4960 applies to taxable years beginning after December 31, 2017.
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Being asked to draft (or review) an executive employment agreement is a common occurrence for attorneys specializing in many practice areas (e.g., corporate, employment, healthcare, etc.). This presentation identifies compensation features in an executive employment agreement that should be reviewed by an Executive Compensation attorney. Failure to consider IRS rules when drafting employment agreements with these compensation features can lead to headaches down the road. The COVID-19 pandemic has given us all enough headaches. Do not let an employment agreement create another one – call your friendly Executive Compensation attorney when drafting or reviewing executive employment agreements.
Faegre Drinker and Multnomah Group held a roundtable discussion designed to provide practical advice on navigating employee benefits during the COVID-19 pandemic. Employers are dealing with remote work, layoffs, reduced hours, as well as determining how these changes will impact the operations of their employee benefit plans. Furthermore, with the passage of recent legislation such as the Families First Coronavirus Response Act and potential passage of the Coronavirus Aid, Relief and Economic Security Act, employers are faced with more challenges and changes.
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As people across the country react to the quickly changing COVID-19 pandemic, Congress passed another piece of legislation providing guidance and relief on a variety of issues — the Coronavirus Aid Relief and Economic Security (CARES) Act, signed into law on March 27, 2020. This article includes brief summaries of what employers should know about key benefits-related components of the CARES Act. Plan sponsors should review their plans to assess the impact of these changes and take appropriate steps to implement the changes (some of which are required).
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In our sixth installment of ERISA at 45, Mona Ghude speaks with Sarah Bassler Millar about the major changes to executive compensation over the years – including the addition of 409A to the tax code, how employers have become more aware of the tax aspects of deferred compensation arrangements, why employers are moving to a defined contribution type of deferred compensation arrangement, and the restrictions employers face with instituting top hat plans.
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