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Restricted Stock Units


Chaz

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Hypothetical (real fact pattern changed to protect the innocent):

Employee is awarded restricted stock units that time vest in 2010. Upon vesting, out of negligence/ignorance/etc., the employer does not deliver the shares to the employee nor does it withhold and remit the applicable taxes or report the award at all on the employee's Form W-2 for 2010.

To correct this, does the employer just need to issue an amended Form W-2 and the employee just need to file an amended return for 2010 or is does this situation impose 409A penalties on the employee as well?

I think a strong argument can be made that this does not implicate 409A at all and it can be analyzed under the traditional concept of "constructive receipt" but I am interested in other thoughts.

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