Registration of deferred compensation obligations under the Securities Act of 1933

Article Abstract:

Non-qualified deferred compensation plans that top-hat employees participate in for tax deferral and retirement planning reasons should not be treated as investment contracts subject to the registration requirements of the Securities Act of 1933. For registration to be required, there must be sales of securities. Some issuances are exempt, as well, because the issuance is small or the investors are sophisticated. The SEC should end its moratorium on no-action letters, and nonqualified plan administrators should be given more guidance on when their plans must be treated like securities.

Interpretation and construction, Securities law

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IRS approves rabbi trust set up by a group of employers

Article Abstract:

The IRS approved a multiple-employer rabbi trust in PLR 9542032 despite a 1992 statement that such rulings will only be issued on unfunded deferred compensation plans that do not conform to the model trust in rare and unusual circumstances. The IRS did not require a showing of rare and unusual circumstances despite the fact that the trust in all likelihood did not conform to the model trust. PLR 9542032 did not provide guidance on drafting rabbi trusts in the multiple employer context.

Tax administration and procedure, Tax administration

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DOL withdraws top-hat regulations project

Article Abstract:

The Department of Labor has stopped working on rules for top-hat exemptions from ERISA. The rules would have given exemptions for deferred compensation benefit plans for highly compensated executives. Other pension projects still being worked on include exemptions for holding assets in trust, participant directed investments, penalties for fiduciary violations, domestic relations orders, distribution of individual statements, definitions of participants and summary annual reports.

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