More on How Section 409A Rules

Employee Compensation Review

December 28, 2015

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Employee Compensation Arrangements: Time to Review

Isler Dare PC, Report on Employee Compensation Arrangements

Earlier this month, Isler Dare PC  published an in-depth report on the timeliness of reviewing employee compensation and benefits arrangements. Among the points raised in the report is that of the limited correction opportunity for some types of documentary failures. As the report states:

The IRS released nonbinding guidance reinforcing a limited correction opportunity for documentary failures under Section 409A of the Internal Revenue Code (“Section 409A”). Under the guidance, employers and employees can amend unvested deferred compensation arrangements to correct Section 409A documentary failures and avoid Section 409A penalties as long as the deferred compensation is unvested for the entire year in which the amendment occurs.”

What You Should Do Now Regarding Employee Compensation Plans

In summary, the report recommends the following:

  1. Review your unvested deferred compensation arrangements for Section 409A documentary failures.
  2. Review your “top hat” deferred compensation plan documents and assess the level of discretion delegated to the plan administrator and how it will impact the standard of review a court would use to evaluate your plan administrator’s decisions.
  3. If you’re a public company, begin preparing for the SEC proposed rule implementing the clawback requirements under the Dodd-Frank Act.

Read: Time to Review Your Employee Compensation Arrangements

To learn more, read the full report on the Isler Dare PC website: Time to Review Your Employee Compensation Arrangements Employee Benefits Update (December 2015)

You will also find this report on the Fulcrum Partners LLC “Resource” page as a downloadable PDF. Click the link below.

About Isler Dare PC

IslerDare PC maintains offices in Tysons Corner (just outside of Washington, D.C.) and in Richmond, Virginia. Isler Dare PC is recognized as a premier Virginia-based labor, employment, and employee compensation and benefits law boutique firm.

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