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Showing results for tags 'substitution'.
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Company merged with Target and now wants to enter into new employment agreement with Target Executive. The current employment agreement offers $100k severance benefit upon Good Reason termination due to change in employment position, which will occur. To encourage Target Executive to stay, Company offers new employment agreement with $100k signing bonus and no severance benefit. Would this be a "substitution" under 409A and thus an impermissible change in the time of payment? I think not because under the current agreement he does not get the $100k unless he terminates, which he would not do if he signed the new agreement. -
Large nonprofit health systems are being approached frequently by consultants offering proposal to rescind executives 409A/457(f) SERPs in direct exchange for split dollar loan regime arrangement of substantially equal value (but generally a very different "payment" time/form than under the 409A/457(f) SERP). Push for these proposals now seems to be to help nonprofit employer avoid or reduce 4960 excise taxes where these SERP values would exceed $1M at vesting. Anybody seeing these along with the legal opinions from the promoters that these "swaps" "should not" run afoul of 409A or 457(f)?? Thoughts on whether this violates anti-substitution/anti-exchange rules under 409A/457(f) and if not - why? If an executive and employer bilaterally agreed to cancel SERP in exchange for loan regime split dollar arrangement, should executive insist on indemnification from employer for potential 409A/457(f) infractions/penalties if the promoter's "should be ok" doesn't ultimately align with IRS views on audit - or even at Tax Court? I appreciate any insight as to how these proposals are being greeted by employer's counsel.