Can Employer pay Employee additional compensation equal to 409A taxes paid by Employee?

[Guest bgtees]

I've searched through the Code and the Regs and can't find an answer that directly addresses this. Is is possible to include a provision in a stock option grant qualifying under 409A that would require the Employer/Service Recipient to make a payment to the Employee/Service Provider equal to the amount of taxes owed by the Employee? Thanks!

[Chaz]

You can do it but you probably would want to gross up the amount.

[Guest bgtees]

You can do it but you probably would want to gross up the amount.

Thanks Chaz- some further hunting after I posted led me to the Tres. Reg 1.409A(i)(1)(v), which deals with exactly what you mentioned - grossing up the obligation to pay the taxes.