METHOD AND SYSTEM FOR ADMINISTERING THE HEDGING OF AN EMPLOYEE DEFERRED COMPENSATION PLAN USING SWAPS

摘要

A method and system for administering the hedging of an employee deferred compensation plan, e.g., which employs hedging of NQDC plan liabilities using total return swaps and/or put and call options and/or forwards, for tax purposes. A plan coordinator coordinates a transfer of information between an employer/plan sponsor, a plan administrator that communicates with the employees/plan participants, and a balance sheet provider. The plan coordinator receives and reconciles data and then calculates and modifies relevant information for tax purposes and use in reports that are provided to the plan sponsor and balance sheet provider. Calculations and modifications lot tax purposes allow the plan sponsor to reap tax benefits from the NQDC plan swap hedge. The reports include an upcoming transactions report, which indicates new compensation deferrals, reallocations of previously deferred compensation among specified indices, and withdrawals.

主权项

1. A method for administering, by at least one programmed computer, a process of hedging of at least a portion of at least one plan notional investment of at least one nonqualified deferred compensation plan in which a plan sponsor has hedged its liability under the at least one nonqualified deferred compensation plan for plan notional investments of deferred compensation amounts, made to a plurality of participants in the at least one nonqualified_deferred compensation plan, using at least one hedge instrument comprising at least one total return swap, the method comprising:
obtaining from at least one source_at least the following data:
a) at least a portion of an initial notional investment or at least a portion of a subsequent notional investment of the at least one plan notional investment of the at least one nonqualified deferred compensation plan of the plan sponsor wherein the at least one plan notional investment is to be hedged and wherein at least one plan participant in the at least one nonqualified deferred compensation plan is notionally invested in the at least one plan notional investment, orb) at least one current amount hedged in at least one swap reference fund of the at least one total return swap calculating on at least one programmed computer at least a portion of a required swap notional principal amount in order to hedge at least a portion of the at least one nonqualified deferred compensation plan liability, based at least in part on: i) determining an amount of the at least one plan notional investment to be hedged with at least one swap referenced fund, and ii) where necessary, converting the at least one swap reference fund into at least one fund that is not the at least one plan notional investment; calculating on at least one programmed computer, based at least in part on the at least a portion of the required swap notional principal amount, at least one adjustment showing the at least one swap notional principal amount for the at least one swap reference fund of the at least one total return swap and at least one amount required to be bought or sold in order to modify the at least one total return swap to hedge the liability of the plan sponsor in the at least a portion of the at least one nonqualified deferred compensation plan of the plan sponsor; and providing the at least one adjustment to a swap provider.