At the AARP debate the other day, the populist presidential candidate is said to have delivered himself of the following sentiment: "We oughtta have a law that every CEO's pension, golden parachute, and everything else will be treated the exact same way as the lowest-paid worker's pension." Tom Veal, who actually knows something about pension law, has this to say:
If the law treated every CEO�s nonqualified deferred compensation �the exact same way as the lowest-paid worker�s pension�:
- The CEO's benefits would be insured by the PBGC.
- Benefits would have to be funded by his employer in a trust beyond the reach of the employer�s bankruptcy creditors and in accordance with the recently tightened minimum funding standards.
- Benefits would also be protected from the CEO�s own creditors.
- Benefits would be taxed only when actually received, without regard for the doctrine of constructive receipt.
- Benefits would become fully vested after no more than six years of service.
- Section 409A, which subjects nonqualified plans to a set of hyper-technical, trap-laden rules, whose violation is punished by a 20 percent penalty tax, would be repealed.
Most of these, of course, would be very bad ideas. Does Edwards agree?