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Executive Compensation for Tax-Exempt Organizations: New 4960 Rules and IRS Notice 2019-09 Guidance

21% Excise Tax for Certain Organizations, Aggregation Rules, Excess Remuneration and Parachute Payments, Reporting Requirements

Recording of a 90-minute premium CLE/CPE webinar with Q&A

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Conducted on Tuesday, August 20, 2019

Recorded event now available

or call 1-800-926-7926

This CLE/CPE course will provide ERISA counsel and advisers an in-depth analysis of the executive compensation rules and challenges for tax-exempt organizations. The panel will discuss the 21 percent excise tax for certain organizations, new Section 4960 regulations, IRS Notice 2019-09, aggregation rules, excess remuneration parachute payments, reporting requirements, and planning techniques for structuring executive compensation for tax-exempt organizations.

Description

Deferred compensation and other executive compensation plans and arrangements for tax-exempt organizations differ from those of for-profit entities. New Section 4960 imposes an excise tax on tax-exempt organizations that pay excessive compensation to certain employees. ERISA counsel must understand complex tax rules, reporting requirements, and available planning techniques when structuring executive compensation for tax-exempt organizations.

Under Section 4960, a tax-exempt organization may be subject to a 21 percent excise tax on excessive compensation paid to employees if such compensation exceeds $1 million during the tax year or the aggregate present values of an individual's separation payments and benefits equals or exceeds three times their five-year average pay. Applying Section 4960 involves identifying entities and employees subject to these rules and how parachute payments and aggregation rules can determine if any compensation exceeds the threshold.

Listen as our panel discusses the application of new Section 4960, guidance provided under IRS Notice 2019-09, and practical methods to avoid the 21 percent excise tax.

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Outline

  1. An overview of executive compensation for tax-exempt entities
  2. Typical arrangements for executive of tax-exempt entities
  3. Code Section 4960 and IRS Notice 2019-09
  4. Additional items to consider
    1. Aggregation rules
    2. Excess parachute payments
    3. Reporting requirements
  5. Best practices in structuring executive compensation for tax-exempt entities

Benefits

The panel will review these and other key issues:

  • Recognizing the differences in structuring executive compensation arrangements for tax-exempt vs. taxable entities
  • Understanding the dynamics of Section 4960 and the 21 percent excise tax
  • Determining what entities and employees are subject to Section 4960
  • Essential items to consider stemming from IRS Notice 2019-09
  • Excess parachute payments and the 21 percent excise tax
  • Aggregation rules and key tax planning considerations
  • Practical techniques for structuring executive compensation for nonprofit organizations

Faculty

Downing, Jake
Jake R. Downing
Partner
Seyfarth Shaw

Mr. Downing is experienced in counseling clients on qualified and nonqualified retirement and welfare plan matters...  |  Read More

Schwartz, Richard
Richard G. Schwartz
Partner
Seyfarth Shaw

Mr. Schwartz is a partner in the Employee Benefits & Executive Compensation Department of Seyfarth Shaw LLP. His...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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