TaxLawyer1978

thanks. the facts are that the employee gets the payment only if employeed on date Y, but the board wants the option to pay them if for example they're no longer employed as of date Y because of disability. but the decision would not be made by the Board until date Y. And yes, the question is whether this creates any 409A issues? I believe the answer is NO, because I don't see how it would create an issue, but wanted to make sure. Thanks

Can a bonus plan can provide for both (a) payment of X amount if person employed on Y date, and otherwise if you're not employed on Y date, you don't get paid regardless of the reason for the earlier termination of employment (e.g. no payment even if termination prior to Y date was because of death, disability, etc.) AND (b) Board "may elect, in its sole discretion" (presumably as of date Y) to pay one or more participants who are not employees on Y date such that the participant, even though not employed on date Y, still gets the payment. I believe the answer is NO. But confirming. This is something that the client has drafted and sent for review. Thanks

that is very true. i hate it when this GC does stuff behind my back. i then end up being the one they go to when stuff does hit the fan. and they're terrible about managing their plans to begin with

yes I know. I expressed my concern but the GC likes to do whatever he wants. they did include an indemnification clause as regards any taxes that "should have been withheld from the payment"

thanks, I don't know about the 1099 part either but that's what the general counsel agreed to with the woman's attorney. I'm only their ERISA counsel and was not part of the negotiation

A company incorrectly made contributions to a defined contribution plan on behalf of an employee for over 20 years. The employee received monthly statement and was told a year prior to retirement she had excess of $120K in benefits in the account. Error was discovered and funds forfeited, but the company settled with her on the side to pay her the amount of the benefit. Question: what kind of W2 compensation is this reportable as? Is this wages that go in box 1? It was agreed that 2/3 of the settlement amount would be W2 and 1/3 reported on a 1099-MISC. Thanks in advance.

Thanks all. Follow up question. So the client is considering converting to an LLC structure and offering some sort of an option plan to the same execs that are participants in the phantom stock plan. Improper substitution? I read from Luke Bailey that the answer is yes and that is also my instinct. There are no other NQDC plans right now and would be no payout on the stock plan. Thanks again.

A client wants to terminate a phantom stock plan. No shares have vested and value of shares minimal. There would be no distributions on termination, therefore no acceleration on distributions. Are we subject to the rules on terminations under 409A? in other words, can we only terminate if one of the 3 tests in 409A is met? Does it matter if there is no acceleration on distributions here because no distributions would be made. Follow up on this. So the client is now thinking converting to an LLC and offering those same execs some type of an option plan. I imagine that's improper substitution, but thoughts? Thanks