IRS Section 409A Notice Requires Review of Compensation Agreements That Condition Payments Upon Signing Releases

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IRS Section 409A Notice Requires Review of Compensation Agreements That Condition Payments Upon Signing Releases
Nixon Peabody LLP

[Guidance Overview]
Mar. 17, 2010

Excerpt: Not all severance or employee payment plans are subject to Section 409A. If all payments under an agreement are made by March 15 of the calendar year following the year in which the right to the payment vests, then the payment is considered a 'short-term deferral' and exempt from Section 409A. For example, many separation agreements that are created at the time of separation with a prompt lump sum payout may not present a problem.

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