I Love It When a Plan Comes Together - From 409A and 457A to The A-Team

Another convergence of ERISA and pop culture has emerged. For those of us who fight through the complexity (that's my kind word for it) of 409A on a daily (hourly?) basis, we now have 457A. 457A is a different kind of horror show - one with a twist, a surprise ending if you will - as its breadth appears not to have been apparent to anyone, including those who drafted it. This provision, once billed as a get-the-offshore-hedge-fund-people provision, has morphed into a provision that also potentially reaches (i) onshore investment funds owned by tax-exempts (oh gee, there's none of those, except for maybe almost all of them) and (ii) offshore operating companies not organized as corporations for US tax purposes. Without getting into the thorny question of whether this scope reflects consistent tax policy, it is a scope that has creepingly emerged from the language of the statute, rather than one intended as a matter of craftmanship. Clearly, I can no longer affectionately refer to 409A as ol' "cap-A" anymore, as there's now a new kid on the block (or a Johnny-come-lately new kid in town, for those who understandably prefer the Eagles over Marky Mark). Maybe cap-A is the new 666.

So what should we call the weary practitioner group that looks for creative ways to fight through this thicket? It seems to me that the only possible choice is . . . The A-Team. (Thanks to my friend Manuel - an employment lawyer, no less - for identifying this clever convergence.) And lest you think I'm straining here, please take note of George Peppard's catch line: "I love it when a PLAN comes together" (emphasis added)! Now, putting aside the irony of the phrase in this particular context, there's Destiny for you!

Pity the fool who joins this A-Team (thus injecting a little T into this A). Maybe we'd be better off focusing on such things as acceleration elections under 83, remedial amendment periods, secular trusts, tax-deferred annuities for tax-exempts, earlier deductions for nondeferred compensation, COBRA and self-dealing prohibited transactions - here's one time where it might be worth being relegated to the B-Team. See Code §§ 83(b), 401(b), 402(b), 403(b), 404(b), 4980B; ERISA § 406(b).

With best wishes for what's shaping up to be quite an . . . um . . . interesting New Year - Happy ChristmaHanuZaa! . . .