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Problem: In less than six months, your company’s executives may become liable for income tax, plus a 20% additional tax, as well as penalties and interest, on income they have earned, even if payment is not due until a later year, or is conditioned on an event, such as a termination without cause that is uncertain to occur. This applies to both public and private companies. December 31, 2008 is the deadline to bring your company’s non-qualified deferred compensation plans and arrangements, including employment and separation agreements into full compliance with §409A of the Internal Revenue Code.
Issue: What changes must you make to correct your company’s compensation and benefit arrangements to comply with §409A?
Solution: Among other measures that may be applicable to your specific arrangements, each of the following must be addressed before December 31, 2008:
For assistance, please call the Ford & Harrison attorney with whom you work or any one of the following attorneys in the firm’s Employee Benefits Group: Stephen Zweig, 212-453-5906; Jeffrey Ashendorf, 212-453-5926; or Victoria Chemerys 305-808-2107.