409A Correction Program

[MarkS]

Any prohibition against Employer reimbursing Employee the 20% excise tax when using the program? 

[CuseFan]

I wouldn't think so, provided it is reported as taxable compensation to the employee.

[Paul I]

CuseFan is correct, there is no prohibition and it is reported as taxable compensation to the employee.  But first, read the document/agreement.

It is not uncommon for the document/agreement to contain a 409A Gross-Up Payment clause spelling out terms and conditions of such a payment.  For example, you may find provisions specifying timing of the gross-up payment and the tax year of the individual in which the gross-up will be paid and be taxable income, specifying how the gross-up will be calculated, specifying obligations of the individual to work with the company to contest the claim or to cooperate with the company's legal counsel, and other related details.

[MarkS]

Nothing on gross-up. The Plan does provide that the Participant is solely responsible for all 409A penalties, and Employer has no obligation to indemnify. This is the 20% excise tax payable when correcting a mistaken deferral under the 2008-113 program. Thanks