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Six-Month Delay after Spin Off


Just Me

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Publicly traded employer sells a subsidiary to a non public entity. Public company owns 60% of the non-public entity (the buyer), so the empoyees of the subsidary do not have a "separation from service" from the seller under Section 409A. When they separate from serivce from the buyer, they will also be considered to be separating from service from the public company as well. Six month delay for specified employees? Or because they NOW work for a non public entity, no six-month delay requires? [This falls in the "grey area" where they don't have a separation from service from the original employer (under the 50% controlled group test applicable to separation from service), but also are no longer "employed" by the original employer either (under the 80% test of who is the service recipient).]

Ain't 409A just a hoot?

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