December 10, 2004
Council Urges Transition Relief, Grandfather Rules for Deferred Compensation Guidance
As the Bush Administration is developing guidance on the recently enacted deferred compensation provisions, the American Benefits Council is continuing to urge the U.S. Treasury Department and Internal Revenue Service (IRS) to provide meaningful grandfather and transition rules. The Council has urged the agencies to make exceptions from the deferred compensation rules for broad-based plans such as severance pay plans and equity appreciation rights programs. We are emphasizing the importance of good faith standards of compliance during the transition period due to the onerous nature of the penalties for failure to comply with the new rules.
A December 8 letter signed by Senators Gordon Smith (R-OR), Orrin Hatch (R-UT), Jim Bunning (R-KY) and Bob Graham (D-FL) urges Treasury to provide a meaningful grandfather rule that would not disrupt existing compensation arrangements and transactions. The letter also requests that Treasury and IRS adopt a good faith standard of compliance. Council staff met again with Treasury officials on December 10 to discuss equity appreciation rights programs. Guidance is still expected to be released as early as next week. For more information, contact Lynn Dudley, Council vice president and senior counsel, at (202) 289-6700.
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.