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IRS Releases Guidance on Applicability of Code Section 162(m) to CFOs of Smaller Reporting Companies

The IRS recently released a Chief Counsel Memorandum in which the IRS concluded that the CFO of a public company, which is eligible to report under the SEC?ÇÖs executive compensation disclosure rules as a ?Ç£smaller reporting company,?Ç¥ may be subject to Code Section 162(m)?ÇÖs $1 million compensation deduction limit. The limit under Code Section 162(m) applies to ?Ç£covered employees,?Ç¥ which are a public company?ÇÖs CEO and certain other highly compensated executives whose compensation is required to be disclosed pursuant to the SEC?ÇÖs executive compensation disclosure rules. For larger public companies, this means the limits of Code Section 162(m) generally will apply to its CEO and its three most highly compensated executives, other than its CEO. The company?ÇÖs compensation deduction for its CFO is not limited by Code Section 162(m) because the CFO?ÇÖs compensation must be disclosed due to his or her position, not due to the compensation level. However, for… Continue Reading

PBGC Updates Retirement Age Tables for Distress or Involuntary Terminations

The PBGC recently published a final rule that contains a new table for determining expected retirement ages; the table is used to compute the value of benefits for participants in pension plans undergoing distress or involuntary terminations. The new table applies to any plan being terminated by the PBGC with a valuation date falling in 2016. The final rule can be found?áhere.

IRS Publishes Final Hybrid Plan Regulations

The IRS recently issued final hybrid plan regulations which permit specified changes to interest crediting rates to comply with previously issued hybrid plan regulations without violating the anti-cutback restrictions of ERISA and the Internal Revenue Code. Prior final regulations issued in 2010 and 2014 provide a list of interest crediting rates and combinations of rates that satisfy the requirement that a plan not provide an effective rate of return in excess of a market rate of return. Hybrid plans with interest crediting rates that may exceed permissible rates must be amended to reduce their current rates. This reduction with respect to accrued benefits would, in the absence of the relief provided in these final regulations, violate anti-cutback restrictions under ERISA and the Internal Revenue Code. The final regulations also generally extend the effective date and required amendment date requirements applicable to interest crediting rates until January 1, 2017 (and a… Continue Reading

December 2015