Is this arrangment subject to 409A?

[Guest drp41980]

Employer enters into a "Deferred Compensation Agreement" with employee, whereby after employee ceases working for the employer, employee will receive 15% of any collections received from any business the employer does with clients the employee brought to the company. The arrangement lasts for 61 months after the employee ceases working for the employer. Payments are made by the 15th day of the month following the calculation of the billings for that month. For example, Employee ceases employment in December, in January Employer bills and collects $1000 for work done on clients brought in by former employee while he was employed, by Feb 15 of the same year Employer would pay former employee $150. This arrangement would continue for another 60 months. I don't believe that this arrangement is subject to 409A because of the short term deferral exception, the amount being paid out within 1 month of when the right to the compensation arises. Please give me your thoughts. Greatly appreciated!

[GBurns]

I do not think that this should have been titled as any sort of Deferred Compensation agreement. It is a simple residual commission agreement and is popular in many industries. It is a standard part of the commission agreement used by the insurance industry.