BENEFITS BYTE

October 1, 2004
BB 04—101

In this issue:

  • Conference on Int'l Tax Bill Progressing; Could Finish Before Recess
  • Council Files ESPP Comment Letter

Conference on International Tax Bill Progressing; Could Finish Before Recess

Staff members from the House of Representatives Ways and Means Committee and the Senate Finance Committee are continuing work on reconciling different versions of the international tax bill (the American Jobs Creation Act (H.R. 4520) from the House and the Jumpstart Our Business Strength (JOBS) Act (S. 1637) over the weekend with the next scheduled meeting of the conferees late October 4.

Both bills include provisions requiring significant changes to current deferred compensation practices. (A side-by-side review of both bills' deferred compensation proposals is available on the Council Web page.)

As many as 299 amendments to the bill were filed by the Senate by the deadline on September 30, with 41 filed by House conferees. Three amendments were filed on deferred compensation: One by Representative Sam Johnson (R-TX), one by Senators Charles Grassley (R-IA) and Max Baucus (D-MT), and another by Baucus alone. Another amendment was filed by Senator Orrin Hatch (R-UT) that would exclude incentive stock options and employee stock purchase plans from wages and thus from withholding.

We do not yet have the draft language for the amendments. However, we are working with appropriate congressional staff to:

  • clarify the grandfathering of existing arrangements,
  • include a prospective effective date,
  • limit the application of the new rules to SERPS and excess benefit plans, as well as a variety of stock plans, and
  • correct numerous other flaws in the legislation.

A list of key nonqualified deferred compensation issues is available on the Council Web site.

The Council will continue to monitor developments in this legislation. For more information contact Lynn Dudley, Council vice president and senior council, or Diann Howland, Council vice president, retirement policy, at (202) 289-6700.

Council Files ESPP Comment Letter

On October 1, the Council filed a comment letter on Employee Stock Purchase Plans (ESPPs) with the Internal Revenue Service (IRS) in response to its request for comments in Notice 2004-55.

In Notice 2004-55, the IRS requested comments on whether the final regulations on ESPPs should be amended to make them consistent with the newly finalized Incentive Stock Option (ISO) regulations. The Council's letter focused on several issues raised in the IRS notice, including whether any subcategory of employees may be excluded from participation in the ESPP, whether additional rules are needed to address the inadvertent exclusion of employees, and whether individuals should be allowed to carry over amounts from an earlier plan or offering to a new plan or offering. For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.