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Compensation Planning Journal
The following were originally printed in BNA Tax Management's Compensation Planning Journal, a monthly journal which is part of the BNA Tax and Accounting Center.
| Volume 37 Number 11
Friday,
November 6, 2009
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Practical Considerations
for Making Global Equity Grants
by Susan A. Wetzel, Esq.
Haynes and Boone, LLP
Dallas, Texas
The challenge in implementing equity-based compensation plans is maximizing employee value with minimum tax impact while limiting the detrimental effect such benefits may have on existing stockholders. In the United States, there are many methods for providing employees with equity-based compensation that provide maximum value to employees while minimizing stockholder impact. The most commonly used methods are awards of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses, and stock purchase plans.1 Typically, these awards are subject to vesting requirements based upon either continued employment with the granting entity (or a member of its controlled group) or achievement of specific performance goals.
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Section 409A Audits Are Underway
Even though §409A was enacted in 2005, many aspects of the provision have been delayed or have been regulated under reasonable, good-faith standards since enactment. For this reason, many practitioners have assumed that IRS audits under §409A would be delayed.
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Final GINA Regulations Expected this Year
The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits health plans, health insurers and employers from discriminating against individuals on the basis of their genetic information. In October 2009, the IRS, DOL and CMS issued interim final regulations under GINA.
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IRS Updates §402(f) Safe Harbor Explanations for Eligible Rollover Distributions
The IRS recently issued Notice 2009-68, 2009-39 I.R.B. 423, which provides updated “safe harbor” explanations that plan administrators can use to meet the Code §402(f) requirement that plan participants receive written explanation of direct rollover rules, mandatory tax withholding and tax treatment of distributions that are not rolled over. Specifically, Notice 2009-68 revises the safe harbor explanations that were previously published in Notice 2002-3, 2002-1 C.B. 289, in order to reflect subsequent changes in the law and to reorganize and simplify the presentation and description of a participant's rollover options.
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