More 409A headaches: Existing arrangements containing employment release provisions may need to be amended before year-end for Section 409A compliance (and new arrangements with such provisions need to be carefully drafted)

Section 409A of the Internal Revenue Code (“Section 409A”) generally provides rules governing nonqualified deferred compensation arrangements with the main focus of such rules being limiting the ability of both the plan participant and his or her employer to manipulate the timing of payments under such nonqualified plans (although an employee/employer relationship is not required for Section 409A to apply). In order to accomplish this goal, Section 409A is extremely broad in scope and can also apply to employment agreements, change of control agreements, severance plans as well as other similar agreements that provide for severance or other compensatory payments unless the agreement qualifies under some limited exemptions from Section 409A.   

Read: "More 409A headaches: Existing arrangements containing employment release provisions may need to be amended before year-end for Section 409A compliance (and new arrangements with such provisions need to be carefully drafted)"


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