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Mark Whitelaw

Covad-19 Laid-off 409A Participants

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Many companies are laying-off their workers temporarily to get them off their payroll and onto unemployment benefits.  Expect this will trigger lump-sum termination distributions to a lot of participants - especially at companies that extended 409A plans to lower and middle management HCEs. 

Luke - Thoughts?  Anything those employers can do?  Thanks!

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Not saying that.  Not the point.  Expecting the most exposed 409A participants are those in lower management positions.  Don't see 409A exceptions for being terminated and later rehired.  Just curious if these people are SOL or not.

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But your question presupposes that "lower management" has 409A compensation and my point is they should not have the problem in the first place because they should not have 409A compensation.  l am just being unsympathetic.  If these people are SOL, they never should have been in luck that they are now out of.  Not their fault.

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Agree 100%  I see surveys showing companies extending 409A plans down to managers making $100,000 - $150,000.  Common to see life insurance companies promote inducing managers making $125,000.  WOW!!! 

Back when I was supporting NQDC we never included anyone that already wasn't in the maximum tax bracket.  Otherwise, bracket creep exposure and would have been better just putting their after-tax paycheck in a no-load NQ Variable Annuity.

 

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