Legal Alert: Making Tax Code Section 409A Corrections Before Time Runs Out


Problem: In less than six months, your company?s executives may become liable for income tax, plus a 20% additional tax, as well as penalties and interest, on income they have earned, even if payment is not due until a later year, or is conditioned on an event, such as a termination without cause that is uncertain to occur. This applies to both public and private companies. December 31, 2008 is the deadline to bring your company?s non-qualified deferred compensation plans and arrangements, including employment and separation agreements into full compliance with §409A of the Internal Revenue Code.

Issue: What changes must you make to correct your company?s compensation and benefit arrangements to comply with §409A?

See full alert for Solution.

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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.

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