EMPLOYERS FACED WITH SUBSTANTIAL HARDSHIP MAY FIND RELIEF FROM SAFE HARBOR 401(k) REQUIRED CONTRIBUTIONS.

By: Erin C. V. Bailey
On May 18, 2009, the Internal Revenue Service (“IRS”) issued proposed regulations Suspension or Reduction of Safe Harbor Nonelective Contributions.  The regulations would amend Internal Revenue Code (“Code”) Sections 401(k) and 401(m) to allow certain employers who incur a substantial business hardship to reduce or suspend required safe harbor nonelective contributions without having to terminate the plan or lose the plan’s qualified status (currently only reductions or suspensions of employer matching contributions are allowed under certain circumstances).  Though the regulations are proposed, employers may rely on them immediately pending final regulations (any final regulations which are more restrictive will be applied prospectively only).  MORE...

THE WOLF IS CIRCLING THE FLOCK: MORE 409A TRAPS FOR THE UNWARY



By: Melody A. Simpson
We gave you a “breather” from Internal Revenue Code Section 409A warnings in our last quarterly newsletter, on a theory somewhat similar to the one explaining why the boy should have stopped crying “wolf.” But in contrast to the Aesop fable where the boy was crying out false warnings to the point where no one believed him when peril actually struck, the truth is that Code Section 409A compliance is, if possible, more critical than ever – not only for classic nonqualified deferred compensation arrangements for executives and board members, but also for the everyday salesman working on commission or the middle manager entitled to reimbursement of reasonable and necessary business expenses. MORE...