<nobr>Nov 5, 2004</nobr>

ERIC Submits Statement to Treasury on Nonqualified Deferred Compensation

Washington, D.C. - The ERISA Industry Committee (ERIC) today submitted to Treasury its preliminary recommendations from large employers on regulations for nonqualified deferred compensation (“Pressing Issues Under IRC §409A”). The submission was filed in response to questions raised about amendments to the new law governing nonqualified deferred compensation contained in the American Jobs Creation Act (P.L. 108-357) during an October meeting of ERIC’s Retirement Security Committee. During the meeting Treasury officials reviewed with ERIC members the areas that will require the attention of regulation writers.

The nonqualified deferred compensation provisions of the American Jobs Creation Act create a new Section 409A under the Internal Revenue Code that overhauls current rules regarding the definition, funding, election, and distribution of nonqualified deferred compensation.

“Implementing the new law is a monumental task, made more difficult by the compressed time frame in which changes must be made” said Janice Gregory, Senior Vice President of ERIC. “ERIC is continuing to work with its members and with the Treasury and IRS to provide a process that is as practical as possible”.


ERIC's preliminary submission addresses five key issues concerning the new law: 1.) the length of time employers will need to adopt amendments under section 409A once Treasury issues comprehensive guidance; 2.) the treatment of benefits earned and vested prior to the law’s effective date under a defined benefit restoration plan; 3.) transition rules for severance plans covering rank-and-file employees; 4) treatment of performance-based compensation; and 5.) distributions to employees who terminate as a result of a business disposition.

ERIC will submit more comprehensive recommendations for regulations as employers finish reviewing the impact of the new law on their plans.

The ERISA Industry Committee (ERIC) is a non-profit association committed to the advancement of employee retirement, health, and welfare benefit plans of America's largest employers and represents exclusively the employee benefits interests of major employers. ERIC's members provide comprehensive retirement, health care coverage and other economic security benefits directly to some 25 million active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Contacts: Mark Ugoretz mugoretz@eric.org, Janice Gregory jgregory@eric.org, and Vanessa Scott vscott@eric.org at The ERISA Industry Committee, (202)789-1400.

Websites:

ERIC Letter to Treasury

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