Complying with the New 409A Regulations

Navigating the Complexities of Deferred Compensation

Recording of a 90-minute CLE webinar with Q&A

Conducted on Tuesday, June 2, 2009

Program Materials

This seminar will explain the key requirements of 409A for nonqualified deferred compensation plans and discuss steps companies and their counsel should take in designing, modifying and administering the plans to ensure compliance.

Description

The 409A final regulations, effective January 1, 2009, imposed sweeping changes on the design and administration of nonqualified deferred compensation plans. The new rules also impact other employment arrangements, including severance plans, equity arrangements and bonus plans.

Employers impacted by the 409A regulations must vigilantly monitor their deferred compensation arrangements during the 2009 tax year and beyond to ensure that existing arrangements are not modified in a way that violates 409A and that new plans comply with 409A.

Failure to comply with the 409A final regulations can result in severe financial penalties, including income tax assessments, interest and a 20% additional tax. Newly issued IRS correction procedures may provide limited relief to employers for operational failures under 409A.

Listen as a panel of employee benefits attorneys explains the key requirements of 409A and discusses steps companies and their counsel should take in designing, modifying and administering deferred compensation plans to ensure compliance.

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Outline

  1. 409A requirements
    1. Which plans and arrangements are subject to the new rules?
    2. How are plans exempted from 409A?
  2. Select key issues
    1. Elections to defer compensation
    2. Basic payment rules
      1. Permissible payment events
      2. Additional rules for specified employees
      3. Plan aggregation
      4. Plan termination rules
    3. Severance pay/other payment issues
      1. Good reason provisions
      2. Safe harbor
      3. Short-term deferrals
      4. Reimbursement requirements
      5. Releases
    4. Change of control arrangements
    5. Incentive arrangements
    6. Stock rights
      1. Service recipient stock
      2. Private equity expansion
      3. Extending exercise of options
    7. Amendments of deferred compensation arrangements
  3. Dealing with non-compliant arrangements
    1. Income inclusion rules
    2. IRS corrections program

Benefits

The panel will review these and other key questions:

  • What are the most significant changes for deferred compensation plans under the new 409A regulations?
  • What are the penalties for failing to comply with 409A?
  • How can employers take advantage of the new IRS correction program for operational failures?

Faculty

Michael T. Frank
Michael T. Frank
Partner
Morrison & Foerster

He focuses his practice in executive compensation and employee benefits. He regularly advises companies on deferred...  |  Read More

Steven J. Friedman
Steven J. Friedman
Shareholder
Littler Mendelson

He chairs the firm's Employee Benefits Practice Group and has extensive experience analyzing issues related to 409A.

 |  Read More
Carolyn E. Smith
Carolyn E. Smith
Counsel
Alston & Bird

She focuses on executive compensation and employee benefits, including nonqualified deferred compensation, qualified...  |  Read More

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