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Chaz

409A Operational Violation

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Can any one point me in the direction of a discussion of how to "correct" a 409A operational violation that is outside of the formal correction program.

An employee (insider) was awarded restricted stock units that vested and should have been paid no later than March 15, 2009, but were not paid until 2012. How does he pay the penalty/interest? Does he need to amend his 2009 tax return or does he just include the income/penalty/interest in his 2012 tax return?

Thanks.

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Proposed regulation 1.409A-4 has been issued as guidance for calculating taxes under 409A. One can rely on the regulations until further notice. The calculation of the additional interest tax is a bit of a mind bender.

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