Internal Revenue Service Section 409A

The United States Internal Revenue Service is a bureau of the United States Department of the Treasury. The IRS is charged with collecting revenue and enforcing the Internal Revenue Code.  
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IRS Issues Final Regulations on Property Transferred for Services Under Section 83

The Treasury Department (Treasury) and Internal Revenue Service (IRS) have issued final regulations clarifying the forfeiture provisions under Section 83 of the Internal Revenue Code of 1986, as amended, for transactions...more

The ERISA Litigation Newsletter; November 2013

In This Issue: - Labor and Employment and ERISA Class Actions After Wal-Mart and Comcast — Practice Points for Defendants (Part I – Commonality)* - Agencies Release Guidance on HRAs, FSAs, and Employer Payment...more

Sutardja v. The United States: The Federal Claims Court Applies Code Section 409A to Discontinued Stock Options

Earlier this year, the U.S. Court of Federal Claims addressed the application of Section 409A of the Internal Revenue Code ("409A") to discounted stock options in Sutardja v. The United States. As expected, the court...more

Setting the Exercise Price of Stock Options

While there are many differences between large and small employers when it comes to executive compensation, one common issue confronted by employers of varying sizes is how to set the exercise price of stock options....more

Continued Vigilance Required for Nonqualified Deferred Compensation Arrangements

The newness of the IRC Section 409A regulations governing deferred compensation is long-gone, but the complexities of this regulatory scheme remain burdensome and all should be vigilant to ensure compliance as penalties can...more

A Cautionary Tale Under Code § 409A: Case Evidences IRS' Willingness To Seek 409A Penalties For Discount Options

The United States Court of Federal Claims recently issued an opinion confirming that § 409A of the Internal Revenue Code of 1986 applies in the context of discount stock options. The case, Sutardja v. United States, is one of...more

Court Of Federal Claims Upholds 409A "Gotcha"

If your company has been cavalier about Internal Revenue Code Section 409A, you should reconsider. In a recent opinion by the United States Court of Federal Claims, the IRS scored the first points – more than $5 million of...more

Court Affirms Discounted Stock Options Are Deferred Compensation Subject to Section 409A

Court of Federal Claims agrees with the IRS position that section 409A applies to discounted stock options; holding is important for compensatory stock option grants. On February 27, the U.S. Court of Federal Claims...more

More On Discounted Stock Options Under Section 409A

My colleague Jeff Cairns blogged about a recent court case confirming the IRS’s position that discounted stock options can be considered noncompliant nonqualified deferred compensation arrangements under Section 409A of the...more

Section 409A Tax Assessed An Discounted Stock Options – Taxpayer Sues For Refund In Federal Court Of Claims

Code Section 409A which was effective in January 1, 2005, provides strict rules that must be applied to most deferred compensation arrangements accruing benefits after the effective date. Failure to comply with the Code and...more

Year-End Deadline Approaching for Code Section 409A Corrections

Employers should be aware that December 31, 2012, is the Internal Revenue Service's (IRS) deadline for correcting certain documentary violations under Internal Revenue Code Section 409A ("Section 409A"). Specifically,...more

Expiration of 409A Correction Period Regarding the Timing Requirement to Execute a Release Agreement

The payment of severance in the event of a termination of employment is often conditioned on the execution of a release agreement. This requirement may violate the documentary requirements of Code Section 409A ("409A") if the...more

409A Update: Employment Agreements Requiring Executed Releases May Need to Be Amended by December 31

It is standard practice that employment agreements condition payment of severance benefits or other separation compensation on the employee executing a general release of claims against the employer. However, unless...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

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