Section 409A is a section of the United States Internal Revenue Code enacted in 2004 as part of the American Jobs Creation Act and applies to compensation that a worker earns in one year, but that is paid in a... more +
Section 409A is a section of the United States Internal Revenue Code enacted in 2004 as part of the American Jobs Creation Act and applies to compensation that a worker earns in one year, but that is paid in a future year. If deferred compensation meets the requirements of Section 409A, then the earner's tax liability is the same as it would be for other types of compensation. If deferred compensation does not meet the requirements of Section 409A, then the earner is subject to certain additional taxes.
Section 409A Year-End Correction Deadline: Compensation arrangements such as employment or severance agreements, that provide for payments that are contingent on the execution of a release, must be brought into compliance...more
Severance agreements and employment contracts with release of claims provisions may violate 409A of the Internal Revenue Code. Bad release provisions may be fixed, penalty-free, before December 31, 2012.
The Treasury Department and the IRS have provided favorable transition relief for correcting arrangements that impermissibly condition the payment of nonqualified deferred compensation on a service provider's completion of...more
As the end of the year approaches, important transition relief from penalties and excise taxes imposed by Section 409A of the Internal Revenue Code (the Code) is about to expire. If an employer has an employment agreement or...more
Internal Revenue Code Section 409A governs deferred compensation, which includes, with some exceptions, practically all agreements or plans in which an agreement is made in one year to pay an amount in a later year. Its most...more
By December 31, 2012, all deferred compensation arrangements in which payment is contingent on employee action, such as execution of a release of claims, must either include payment-timing restrictions that comport to IRS...more
Employers with employment agreements, severance policies, and other non-qualified deferred compensation agreements that contain language conditioning any payment on employee action, such as the execution of a release of...more
Employment, change in control, and severance agreements, as well as severance and deferred compensation plans, often condition payment upon the execution of a release or a noncompete or other employment-related condition. Any...more
Employers with employment, severance or other compensation arrangements with their employees should be aware the IRS has taken the position agreements that provide for payments, such as severance payments, that will be made...more
Companies commonly condition the payment of severance benefits upon the terminated individual's execution of an agreement containing a release of claims against the employer. Many release provisions permit a former employee...more
Employers preparing for year-end compliance efforts should be aware of a December 31, 2012 deadline for correcting a common problem in compensation arrangements subject to Section 409A of the Internal Revenue Code.
Background - Section 409A of the Internal Revenue Code (Section 409A) regulates the payment of non-qualified deferred compensation. If a plan or agreement is not otherwise exempt from Section 409A and does not comply with its...more
Severance and other deferred compensation payments that are contingent on the execution of a release can in some circumstances result in a violation of Section 409A of the Internal Revenue Code. Section 409A governs the...more
December 31, 2012, is the deadline for correcting certain errors in the written provisions of nonqualified deferred compensation arrangements that provide payments that are contingent on the recipient’s execution of a release...more
In early 2010, the IRS surprised the benefits community by stating in Notice 2010-6 that deferred compensation arrangements that condition payment on employee action (such as the execution of a release, noncompetition...more
Many employment agreements, especially those for high-level executives, provide severance pay upon a change in control or a termination without cause, but only if the employee signs a release of claims. The IRS has noted that...more
Non-qualified deferred compensation arrangements that are not exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), should be reviewed to ensure compliance with Section 409A’s rules governing...more
Employers should review plans and agreements subject to Internal Revenue Section Code 409A before the end of 2012. That’s when transitional relief afforded by the Internal Revenue Service expires for deferred compensation...more
Change in control, severance, employment and other nonqualified deferred compensation agreements that are subject to Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), and require an employee to...more
Although it may seem early to start preparing for the holiday season, employers should get a head start this year.
Important IRS transitional relief under Section 409A of the Internal Revenue Code for nonqualified...more
Deferred compensation arrangements under which payments subject to Section 409A are contingent on a release must be brought into compliance with documentation requirements by December 31.
The December 31, 2012,...more
Companies have one last chance to correct their nonqualified deferred compensation plans and arrangements to bring them into compliance with Section 409A of the Internal Revenue Code without triggering additional taxes and...more
As previously summarized in our WSGR Alert dated October 8, 2010, the Internal Revenue Service (IRS) established a correction program in Notice 2010-6, providing the ability to correct certain documentary errors in deferred...more
Employers have a time-sensitive opportunity to correct certain documentary violations in plans or contracts subject to Internal Revenue Code Section 409A under the Internal Revenue Service’s (IRS’s) recently introduced...more
On January 5, 2010 the Internal Revenue Service published Notice 2010-6 providing relief and guidance on corrections relating to document failures of non-qualified deferred compensation (“NQDC”) plans to comply with Section...more
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