Browsing All Posts filed under »409A«

Distributable Events under 409A

October 22, 2009

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There are only six permissible distributable events under IRC § 409A.  They are: 1) A fixed time or pursuant to some fixed schedule specified under the plan; 2) Separation of service; 3) Change in control; 4) Severe financial hardship; 5) Disability; or, 6) Death.  The specific date requirement may be met by way of an […]

409A Avoidance: Some Basic Exceptions & Exemptions

October 11, 2009

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Which plans can be exempt from 409A?  Of course, certain types of arrangements are specifically exempted from Section 409A coverage, such as IRC 401(a) qualified retirement plans, bona fide vacation leave, sick leave, disability and death benefits, etc.  Nevertheless, the key to avoiding 409A coverage lies in whether receipt of compensation can be deferred, as […]

Performance Incentive Arrangements and IRC 409A

October 5, 2009

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IRC § 409A provides strict rules, and harsh penalties, governing nearly all situations where compensation is to be paid under a deferred compensation arrangement.  Compensation is deferred and subject to IRC § 409A if the service provider (ie: employee, executive, or independent contractor) has a legally binding right during a taxable year to compensation that […]

Severance Pay Arrangements and IRC 409A

September 28, 2009

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IRC § 409A applies broadly to any deferred compensation arrangement in which a service provider (ie: employee, executive, or independent contractor) has a legally binding right during a taxable year to payment that is or may be payable in a later taxable year.[i]  Though no legally binding right will be found where a service recipient […]