Summary
Abbott Laboratories (ABT) filed an 8-K on December 12, 2005, to report amendments made to its 401(k) Supplemental Plan and Supplemental Pension Plan. These changes were necessary to comply with the requirements of Internal Revenue Code Section 409A and its proposed regulations concerning deferred compensation. The amendments primarily involve the removal of minimum dollar thresholds for distributing plan benefits into grantor trusts. Previously, benefits were only funded into trusts once they reached $50,000 for the 401(k) plan and $100,000 for the pension plan. Section 409A restricts distributions to specific, enumerated events, not simply reaching a funding threshold. As a result of these amendments, vested plan benefits below the prior thresholds, along with benefits accrued up to December 31, 2005, will be funded into participants' grantor trusts and recognized as income by participants in 2005. Importantly, the amendments do not alter the amount of benefits being paid to participants or the method of funding these benefits.
Key Highlights
- 1Abbott Laboratories amended its 401(k) Supplemental Plan and Supplemental Pension Plan.
- 2Amendments were made to comply with new Internal Revenue Code Section 409A regulations.
- 3Minimum dollar thresholds for benefit funding into grantor trusts were eliminated.
- 4Previously, benefits funded into trusts upon reaching $50,000 (401k) or $100,000 (pension).
- 5Vested benefits below these thresholds and accrued through 2005 will be funded and recognized as income in 2005.
- 6The amount of benefits and the form of funding remain unchanged by these amendments.
- 7The amendments are effective for compliance with Section 409A's distribution requirements.