Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE

409A

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A taxpayer we will call John worked for a savings bank in New York that was acquired by Washington Mutual Bank. John participated in the New York bank’s supplemental executive retirement plan (SERP) and its deferred compensation plan, both of which were nonqualified deferred compensation plans. When Washington Mutual Bank acquired the New York bank, …

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 Internal Revenue Code. Unless structured to be exercised only on a fixed date or an allowable 409A event, discounted stock options will result in …

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 the applicable Treasury Regulations can result in a 20% surtax plus interest on the amounts received under non-compliant deferred compensation…

In IRS Notice 2010-6 and Notice 2010-80, the IRS expanded rules outlined in the 2007 Final Regulations under Code Section 409A to describe a potential violation of that Section where certain severance type payments are made upon the execution of a release (or the expiration of a statutory rescission period). While certain severance agreements are…