Employers and employee benefit plan service providers constantly face difficult technical questions requiring skilled legal advice. The firm provides legal advice to employers and plan service providers in the following areas: design and administration of qualified plans, legislative and regulatory changes, representation before the Internal Revenue Service, compliance with Title I of ERISA, executive compensation, health and welfare benefits, tax-exempt and governmental employer representation, financial institution and service provider counseling, and employee benefits dispute resolution. 

Areas of Focus

Qualified Retirement Plans

As an employer, you want to structure your qualified retirement plan to provide maximum value to employees at a reasonable cost to your business. Proper design and administration of your plan are critical to your objectives. Above all, you want to ensure that your plan satisfies the complex rules for tax qualification while preserving the flexibility to respond to the changing needs of your workforce.

Caplin & Drysdale can provide comprehensive legal assistance for every aspect of your qualified plan. We have extensive experience in the design, administration, and restructuring of 401(k) and other defined contribution plans, traditional defined benefit plans, hybrid plans (such as cash-balance plans), ESOPs, and innovative approaches to plan design. Whether you are a large corporation, a tax-exempt entity, a state or local government, or an international organization, we can help you put a qualified plan into place and maintain compliance with the fast-changing tax and ERISA rules. Because our attorneys have worked closely with key government personnel, we can provide strategic insight into the resolution of difficult new issues for qualified plans.

Our Services

Qualified Plan Design

  • Advising on plan design choices
  • Advising on technical qualification issues
  • Drafting and amending plan documents
  • Drafting employee communications
  • Filing for IRS determination letters and responding to IRS inquiries during the determination letter process

Qualified Plan Administration

  • Advising on plan operational issues
  • Advising on amending qualified plans for legislative and regulatory changes
  • Advising on strategies for correcting plan defects under EPCRS
  • Filing plan corrections under EPCRS
  • Preparing summary plan descriptions and other plan communications and forms

Transactions Affecting Qualified Plans

  • Negotiating treatment of employee benefits in corporate mergers and acquisitions
  • Structuring deal terms for plan spin-offs, mergers, and other activities
  • Providing legal advice on strategic uses of qualified plans for workforce restructurings, including early-retirement windows, downsizings, and phased retirement

Representative Engagements

  1. A large corporate employer who had engaged in a significant number of acquisitions wanted to redesign its existing qualified plans to cover its expanded workforce and to rationalize the retirement benefits provided to different groups of employees.

    Result: Caplin & Drysdale was retained to provide comprehensive assistance. We advised on mergers of acquired plans, identification and preservation of protected benefits and distribution options, rationalization of plan operations, and preparation of omnibus plan documents.
  2. Clients frequently identify problems in the administration of their qualified plans. These may relate to plan loans, failures to comply with the complex rules governing limitations on benefits and contributions, inadvertent exclusion of covered employees, ADP and ACP failures, and other operational defects.

    Result: Caplin & Drysdale helps these clients navigate the requirements of the IRS Employee Plans Compliance Resolution System ("EPCRS") to structure a corrections approach that maximizes protection while minimizing cost. We advise on the availability of EPCRS and provide guidance on the various correction options it affords, including self-correction ("SCP"), voluntary correction with IRS approval ("VCP"), anonymous voluntary correction ("Anonymous VCP"), and correction on audit ("Audit CAP").

Title I of ERISA

Whether you are an employer sponsoring an employee benefit plan or a third-party plan service provider, you have to navigate the maze of Title I. You need to ensure that your plan is in compliance with ERISA's strict fiduciary standards and the complex reporting and disclosure rules the Department of Labor administers under Title I, and you need to defend your plan against participant lawsuits.

Caplin & Drysdale provides the advice and representation that you need to comply with Title I. If you are a plan fiduciary, we can advise you on every aspect of your fiduciary obligations, including plan administration issues, investment-related issues, and compliance with the prohibited-transaction rules. If you are not a fiduciary, we can help you structure your operations to ensure that you do not become one. We bring our experience in Title I work to your advantage -- whether you look to us for a legal opinion on your Title I exposure, for representation before the Department of Labor on audit or seeking  regulatory relief, or for counsel and representation in Title I litigation.

Our Services

  • Counseling and advising employers and plan service providers on Title I issues
  • Representing clients before the Department of Labor, including responding to audits under Title I, requesting advisory opinions, and applying for prohibited-transaction exemptions
  • Counseling and representing clients in employee benefits litigation, including providing tailored advice on complex technical issues
  • Testifying on Title I regulations

Representative Engagements

  1. Facing a split in circuit court case law, a large employer appeals a district court ruling that the anti-cutback rule applies to plan shutdown benefits and asks a national trade association to prepare an amicus curiae brief on this important question.

    Result: Caplin & Drysdale builds on its earlier success in Ross v. Pension Plan for Hourly Employees of SKF Industries, Inc. to prepare the amicus brief and to provide critical, detailed technical analysis overlooked by the district court.
  2. A national plan service provider is developing new bundled plan administrative services necessary for the service provider to compete in the market.

    Result: Caplin & Drysdale offers advice to help the service provider determine its business plan while complying with Title I, particularly the prohibited-transaction rules.

Executive Compensation

The success of your business depends directly on the caliber of your executives. To attract and retain the best management team, you have to offer your key employees a compensation package that delivers the most value while minimizing tax risks both for them and for your business. The intricate and exacting compliance regime for "nonqualified" deferred compensation plans under Code section 409A includes not only documentary and operational requirements but also significant restrictions concerning tax-preferred funding vehicles. The emerging regulatory regime for certain offshore arrangements under Code section 457A promises to be no less complex and has made proactive tax planning even more imperative for both employers and their executives.

Caplin & Drysdale can help you with every aspect of your executive compensation arrangements. We routinely negotiate employment agreements, structure various forms of nonqualified deferred compensation arrangements, and prepare equity-based compensation programs. We can help your business navigate the punitive tax rules for golden parachute payments and executive pay above the $1 million cap. We can give you the critical advice you need to determine when an "innovative" compensation or funding strategy exposes your business and your executives to unnecessary tax risks. And we can help you to identify and correct documentary and operational defects in your existing executive compensation programs.

 Our Services

  • Designing and drafting nonqualified deferred compensation arrangements that comply with Code sections 409A, 457A and/or 457(f)
  • Structuring equity-based compensation arrangements, including
    • nonqualified stock options
    • incentive stock options
    • employee stock purchase plans
    • restricted stock
    • stock appreciation rights
    • phantom stock and phantom stock options
  • Negotiating and drafting executive compensation agreements
  • Advising on golden parachutes and the Code section 162(m) $1 million cap on deductible compensation
  • Advising on compensation arrangements using life insurance, including traditional, equity, and reverse split-dollar life insurance
  • Counseling tax-exempt employers on special issues under Code section 457
  • Utilizing IRS-approved correction methods to amend nonqualified deferred compensation plans for documentary and operational compliance with legislative and regulatory requirements

Representative Engagements

  1. A public company needs to grant significant numbers of stock options to its top executives before the earliest date on which it can obtain shareholder approval for purposes of Code section 162(m).

    Result: Caplin & Drysdale devises an innovative structure to permit the immediate grant of options while ensuring that the requirements of Code section 162(m) are satisfied.
  2. A large corporation needs a nonqualified deferred compensation plan for its key employees.

    Result: Caplin & Drysdale helps the corporation structure a complex plan, involving intricate contribution triggers and sophisticated investment strategies, to meet the corporation's objectives.
  3. A large multi-national employer seeks review of its executive compensation programs for documentary compliance with Code section 409A.

    Result: Caplin & Drysdale analyzes multiple plan documents and drafts plan amendments for adoption under an IRS-approved documentary correction program.
  4. A corporate employer requires representation for an employment agreement with its incoming president, including significant amounts of nonqualified deferred and incentive compensation.

    Result: Caplin & Drysdale negotiates and prepares the employment agreement, ensuring that the agreement delivers maximum value to the new president with minimum tax risk to both sides.

Health and Welfare Benefits

Every employer faces regulatory burdens in providing even the simplest health and welfare benefits to its employees.  The Patient Protection and Affordable Care Act ("PPACA") has already greatly increased the complexity of employee health and welfare benefit programs, and will continue to do so as the legal and regulatory regime takes shape in the coming years.  Established rules under HIPAA/HITECH and COBRA also continue to evolve, as do IRS and Department of Labor regulations concerning benefits issues as varied as cafeteria plan rules and participant claims procedures.  You need expert advice to structure your benefits in a way that complies with these rules and takes advantage of the opportunities they can offer.

Caplin & Drysdale can give you the advice that you need. We can help you sort through PPACA, HIPAA and COBRA, work with you to structure your VEBA or Code section 401(h) account efficiently, and advise you on key ERISA concerns. We'll help you stay on top of the legal developments in this fast-changing area and give you the tools you need to provide your employees the benefits they want.

Our Services

Advising on:

  • Health plans (including PPACA, HIPAA/HITECH and COBRA issues);
  • VEBAs;
  • Cafeteria plans;
  • Other welfare benefits;
  • Advising on ERISA issues for health and welfare benefits;
  • Preparing plan documents and employee communications; and
  • Advising on treatment of health and welfare benefits in transactional settings.

Representative Engagements

  1. A major employer is conducting a comprehensive review and restructuring of its VEBA.

    Result: Caplin & Drysdale advises on all aspects of the review. We help the employer understand its options and provide comprehensive advice on how to restructure its funded welfare benefits.
  2. A corporation engaging in mergers and acquisitions needs help to ensure that its purchase and sale agreements handle health and welfare benefits properly.

    Result: Caplin & Drysdale counsels the corporation on all aspects of the treatment of health benefits in the mergers and acquisitions. We help the corporation assess the potential COBRA and other liabilities that it faces, make sure that those liabilities are properly allocated, and secure appropriate indemnification from the other parties to the transaction.
  3. An employer seeks to pre-fund retiree health benefits in a tax-favored manner.

    Result: Caplin & Drysdale designs an innovative arrangement that achieves the desired tax results.

Representing Tax-Exempt and Governmental Employers

As a tax-exempt or governmental employer, you face the same pressures to compete for high-caliber executives and other employees as for-profit employers. But when it comes to structuring deferred compensation and other benefits for your workforce, the tax laws impose additional constraints on you - and give you additional opportunities.

Caplin & Drysdale can help you deal with the unique challenges facing tax-exempt and governmental employers and help you make the most of the additional vehicles available to you. We can advise you on every aspect of your employee benefits issues, from structuring your qualified defined benefit and defined contribution plans to implementing and administering a Code section 403(b) annuity arrangement or a Code section 457(b) plan and dealing with the constraints of Code section 457(f). Our long experience advising tax-exempt organizations and state and local governments on both benefits and other legal matters makes us particularly well positioned to understand the issues important to you and to help you work through the complex tax laws with which you must contend.

Our Services

  • Providing design and administration advice on qualified defined benefit and defined contribution plans
  • Providing design and administration advice on Code section 403(b) arrangements and Code section 457(b) eligible deferred compensation plans
  • Advising on health and welfare benefits
  • Counseling on Code section 457(f) and on exceptions to Code section 457

Representative Engagements

  1. A tax-exempt organization is searching for the best means to provide deferred compensation to its key employees.

    Result: Caplin & Drysdale advises on all the options available to the organization - including qualified plans, Code section 403(b) arrangements, Code section 457(b) arrangements, nonqualified deferred compensation subject to Code section 457(f), and innovative compensation strategies for executives of tax-exempt employers. Caplin & Drysdale helps the employer select the arrangement that maximizes its compensation objectives as an employer while minimizing tax risk for its key employees.
  2. A tax-exempt employer is considering providing domestic-partner employee benefits.

    Result: Caplin & Drysdale provides advice on all aspects of the proposed domestic-partner benefits from ERISA considerations to the treatment and taxation of health coverage.
  3. A governmental employer discovers numerous errors in administration of its Code section 403(b) arrangement and needs guidance on the various corrections programs maintained by the IRS.

    Result: Caplin & Drysdale provides comprehensive advice and counsel on the options available to the employer under EPCRS.  We help the employer structure a sensible and low-cost approach to corrections of the administrative errors.
  4. A tax-exempt employer is considering various options to provide tax deferral for its executive director.

    Result: Caplin & Drysdale works closely with the executive director and the employer to structure a sound approach to providing tax deferral without exposing the executive or the employer to unnecessary tax risks.

  • Ronald G. Cluett
    Of Counsel
  • Richard W. Skillman

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