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Method and system for administering the hedging of an employee deferred compensation plan using swaps

  • US 20050131798A1
  • Filed: 01/06/2004
  • Published: 06/16/2005
  • Est. Priority Date: 04/30/2002
  • Status: Active Grant
First Claim
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1. A method for administering the hedging of at least that portion of a deferred compensation plan in which a plan sponsor has hedged its liability under the plan for notional investments of deferred compensation awards, made to plan participants, using at least one hedge instrument that comprises one or more of a total return swap, an option and a forward contract provided by a balance sheet provider, the method comprising:

  • accumulating information relating to the at least one hedge instrument on an aggregate level and information relating to at least the hedged portion of the plan on an aggregate level and on a plan participant level;

    disaggregating aggregate level information relating to the at least one hedge instrument into respective portions attributable to each plan participant; and

    calculating taxable and tax-deductible amounts of the plan sponsor related to a tax triggering event of a plan participant withdrawal in consideration of (a) a respective portion of the at least one hedge instrument attributable to that plan participant and (b) accumulated information.

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