Separation Pay: Good Reason Safe Harbors

[Randy Watson]

In order to satisfy the "good reason" safe harbors for purposes of separation pay, the service provider must terminate within a predetermined limited period of time after the safe harbor condition arises. The preamble says this is a one year period and the final regs refer to two years. The regs would control in this situation, but perhaps this is a technicality that will be corrected soon. One year seems to make more sense considering the required 90 day notice period and 30 day cure period. Anyone hear anything about this discrepency yet?

[Just Me]

All of the summaries being published and used in connection with the recent webcasts and teleconferences are saying one year. My guess is that the actual regulations are in error and a technical correction will be forthcoming.

[Just Me]

I have just heard that the IRS is saying the preamble is incorrect and the time period for termination under the good reason provisions is two years. Hopefully, we'll get some formal confirmation of this soon.