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David Ledermann works with publicly traded companies, closely held businesses and non-profit employers in complex employee benefits matters under ERISA (the Employee Retirement Income Security Act) and the Internal Revenue Code. His representations involve tax-qualified retirement plans and nonqualified deferred compensation arrangements, as well as group health plans and other employer-provided welfare benefit plans. David is often sought out by other attorneys, from both within and outside the firm, to provide guidance and assistance in this dynamic and highly regulated field. When necessary, and as appropriate, he represents clients before government agencies, including the Internal Revenue Service, the United States Department of Labor and the Pension Benefit Guaranty Corporation.

Benefit Plans

David’s work with qualified retirement plans and their sponsors ranges from the design and implementation stages to plan termination, and includes amending plans to achieve employer objectives in response to changing circumstances. He is also involved with correcting operational compliance failures when they occur and negotiating the status of plans in mergers, acquisitions and other transactions. Plan types include defined contribution, such as 401(k) profit sharing plans, and defined benefit, as well as Section 403(b) and Section 457 plans of tax-exempt and governmental organizations.

The 2010 Patient Protection and Affordable Care Act (“ACA”) continues to evolve due to ongoing legislative, regulatory and judicial developments, presenting continuing challenges for employers. David assists clients in navigating the pitfalls and opportunities organizations may encounter under the ACA, and advises employers in connection with both insured and self-funded group health plan coverage. In addition, David advises employers concerning the adoption of, and regulatory compliance for, other welfare benefit programs, including cafeteria plans, flexible spending accounts, dependent care assistance plans, health reimbursement arrangements, health savings accounts, short- and long-term disability plans, severance pay, life insurance, educational assistance and supplemental unemployment benefits.

Executive Compensation Programs

David also helps organizations with the recruitment and retention of managerial and executive talent through various forms of nonqualified deferred compensation arrangements. He has substantial experience with the design, drafting, implementation and operation of these executive compensation programs, including performance-based and equity-funded variations of them. Through wide-ranging applications of deferred compensation principles, as regulated pursuant to Internal Revenue Code Section 409A, David has been able to help clients establish meaningfully and mutually beneficial arrangements, notwithstanding the often onerous restrictions imposed by this statute.

Many employers are all too familiar with the experience of having to refund contributions made to the organization’s 401(k) plan by highly compensated employees to remedy the previous year’s failed actual deferral percentage (“ADP”) test. The ADP test is designed to ensure that the average deferral rates for highly and non-highly compensated employees are roughly equal. Thanks to the Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”), the experience of refunding highly compensated employees’ deferrals in order to satisfy the ADP test will in many cases be consigned to history. The below addresses how the SECURE Act relaxes some of the rules affecting 401(k) plan testing.

Q: Can a 401(k) plan retroactively avoid ADP testing?

The year 2021 presents for the first time the opportunity to retroactively escape the prior year’s ADP test without regard to the extent by which contributions from highly compensated employees exceeded the average deferral percentage contributed by the organization’s non-highly compensated employees. Under the SECURE Act, it is now possible to adopt a safe harbor nonelective 401(k) feature that will exempt the plan from ADP testing with respect to the previous year. Unlike in the past, a notice to participants before the beginning of the year in which the safe harbor nonelective contribution applies is no longer required. As such, employers can now wait until the end of the year, or even longer, before deciding whether to make a safe harbor nonelective contribution for the year.

Q: How are safe harbor nonelective contributions similar to, or different from, safe harbor matching contributions?

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