Does the 6-month delay apply in the case of the death of a key employee?

[smm]

Does the 6-month delay apply in the case of the death of a key employee of a publicly traded company?

[Guest muskyrod]

I would like to know the answer to this question as well.

[smm]

Subsection (g)(2) of the proposed regulations appears to say that there is no delay (see language in parenthesis), but the "separation from service" is defined as including death, so it could be interpreted in a circular manner. Any thoughts are appreciated.

Thanks.

[XTitan]

I read 409A as saying the delay is 6 months beyond the later of separation of service or death. I think the proposed regs reinforce the point by including death in the definition of separation of service. I think of this as the "suicide clause" - if you're fired for being indicted, you have to wait 6 months, but commit suicide and you get paid right away. However, I've had one attorney tell me I'm wrong. Hope that helps.

[Guest LeeNunn]

Here's the text from 409A

In the case of any specified employee, the requirement of subparagraph (A)(i) is met only if distributions may not be made before the date which is 6 months after the date of separation from service (or, if earlier, the date of death of the employee).

Most practitioners have interpreted this to mean that distributions can be made at the earlier of death or six months after the date of separation from service.

[TCWalker]

I think death is pretty much an irrevocable separation from service.

[Kirk Maldonado]

TCWalker:

While that may be true, it doesn't stop the person from continuing to vote in certain locales.

[smm]

...or being elected.......