Compliance Section 409A

Compliance programs typically refer to formalized institutional procedures within corporations and organizations to detect, prevent and respond to indvidual and widespread instances of regulatory... more +
Compliance programs typically refer to formalized institutional procedures within corporations and organizations to detect, prevent and respond to indvidual and widespread instances of regulatory violations.  In response to many corporate scandals evidencing rampant unethical business practices, many nations, including the United States, began passing strict regulatory frameworks aimed at curbing these abuses. Notable pieces of legislation in this area include the U.S. Foreign Corrupt Practices Act (FCPA), Sarbanes-Oxley (SOX), and the U.K. Bribery Act, to name a few. The foregoing statutes and the severe penalties often associated with them form the basis of many modern institutional compliance programs. less -
News & Analysis as of

Escaping the Clutches of 409A

Employers often use non-qualified deferred compensation (“NQDC”) arrangements to motivate or reward executive and management employees. These NQDC arrangements, if properly structured, enable key employees to defer income...more

Compensation Clawbacks and Code Section 409A Acceleration

When the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) became law in 2010, it included a requirement for public companies to recoup, or “clawback,” incentive compensation from executives in the event...more

California Reduces Additional Tax on Section 409A Noncompliance

On October 4, 2013, Governor Jerry Brown signed into law Assembly Bill (“AB”) 1173, which reduces from 20 percent to 5 percent the additional California tax on nonqualified deferred compensation that fails to comply with...more

When Does Optionee Have A Legally Binding Right To Shares – Vesting Or Exercise?

Congress enacted Section 409A of the Internal Revenue Code in 2004. Given the statute’s complexity, the expense associated with compliance and its iron-fisted results, I’ve been amazed that there hasn’t been a greater clamor...more

Deadline Approaching for Section 409A Year-End Correction

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

Employment Contracts and Severance Agreements Should be Reviewed and May Need to be Amended by December 31 to Comply with Section...

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. Most severance...more

Relief for Correcting Certain Internal Revenue Code Section 409A Failures Expires This Year

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

Section 409A Transition Relief Deadline Quickly Approaching

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

Benefits Update, No. 4, November 2012: Deadline to Correct 409A-Covered Documents Involving Employee Releases Is December 31, 2012

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

Year-end Deadline for Correcting Section 409A Deferred Compensation Arrangements Conditioned on Employee Release or Covenant

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

McAfee & Taft EmployerLINC Employee Benefits Law Alert: Year-end IRS deadline looms for correcting release language in 409A...

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

409A Transition Relief Ends December 31 for Certain Severance and Other Employment Agreements

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

Deadline Approaching for Amending Compensation Arrangements to Comply with Internal Revenue Code Section 409A

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

Opportunity to Amend Certain Severance-Related Release Agreements to Comply with Section 409A Expires at Year End

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

December 31 Deadline for Correcting Release of Claims Provisions that Fail to Comply with Section 409A

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. The...more

Section 409A Document Correction Relief: Take the Final Bite of the Apple before December 31st

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

Time is Running Out! December 31 Deadline Nears for Documentary Correction of Payments Contingent on the Execution of a Release...

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 Deadline to Correct Certain Section 409A Payment Timing Errors

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

Review Compensation Arrangements by Year End to Determine if Amendments Are Needed to Comply with Code Section 409A

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

Dec. 31 Deadline for Severance Pay Provisions in Employment Agreements to Comply With Section 409A

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

Executive Compensation Alert: Relief Period for Section 409A Release Timing Errors Expires on December 31, 2012 Action Needed

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

409A Transition Relief Expires at Year-End; Employers Should Review Their Plans

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

Transition Relief for Correction of Section 409A Release Agreement Timing Failures Expires on December 31, 2012

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

"Executive Compensation and Benefits Alert: Important Section 409A Relief Expires at Year-End"

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

Section 409A Transitional Relief Deadline Approaching

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

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