Employment Severance Releases: Avoiding Spectacular Tax Problems for Related Separation Pay

more+
less-

It is a common practice for an employer to require a terminating employee to execute a release of claims in exchange for designated separation pay. Compliance with esoteric tax rules governing deferred compensation is typically far from the minds of the decision makers in that process. The Internal Revenue

Code, however, has laid a trap for the unwary: §409A, while aimed at preventing manipulation of deferred compensation arrangements to artificially delay payment of executive income

tax liabilities, has unfortunate and complex interactions with the release/severance process.

LOADING PDF: If there are any problems, click here to download the file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Varnum LLP | Attorney Advertising

Written by:

more+
less-

Varnum LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×