Continuing Documentary And Operational Compliance Effective January 1, 2009, each deferred compensation plan must comply, both in form and operation, with the applicable requirements of the Final Regulations. Care must be taken to ensure that arrangements in existence prior to 2009 are not modified in a way that violates 409A, and that new arrangements are structured to comply with 409A. There are several areas of potential non-compliance:
Six-Month Delay Rule –
For a public company, either not having language in the plan prohibiting payments of deferred compensation to a "specified employee" during the first six months following termination, or making payments in violation of this rule.
Separation Pay Exception on Account of "Good Reason" –
Amending an existing "good reason" definition that does not require materially adverse action to be taken against the employee does not work to exclude the separation pay from 409A.
Short-Term Deferral Exception –
Not paying a bonus or severance amount by March 15th of the year following the year in which it is "vested" (e.g., because a release needs to be negotiated) removes the bonus or severance amount from the "short-term deferral" exclusion to 409A coverage.
Deferral Elections –
Making initial deferral elections after the beginning of the service year, other than with respect to certain performance-based compensation,or, in the case of sub- sequent deferral elections, not requiring the payments be delayed for at least five years, generally would violate 409A.
Payment Triggers –
409A permits payments of deferred compensation to be made only upon the occurrence of a limited number of events:
(1) "separation from service";
(2) "disability";
(3) death;
(4) at a specified time or pursuant to a fixed schedule;
(5) a "change in control"; or
(6) an "unforeseeable emergency."
Option/SAR Repricing –
Many private companies do not follow the IRS guidelines for determining "fair market value" for purposes of determining the exercise price of options and SARs.
Anti-Acceleration Rule –
409A generally prohibits the acceleration of payments of deferred compensation to any employee.
The 409A Deadline
One thing I would like to mention...don't be tricked into
non-compliance because you don't like the source of information.
Someone may be pushing compliance hoping you won't trust them,
therefore voting for non-compliance.
You have more than 2 weeks to return your ballot.
Vote responsibly and ethically by doing the research.
1 comment:
Since when is the Sault Ste. Marie Tribe of Chippewa Indians a “public company”? This tribe rests on sovereignty in every case that benefits itself, including against employees fed up with unfair employment practices. So why is the board now looking for input from the membership? Is it because when they collect their safe havened retirement they can say it was the “will of the people”? This is so wrong. And in this post where the board’s actions are touted as responsible and necessary, there is no transparency, no mention that the amount is for LIFE! So you figure it out. Look at the longevity of the sitting board members. What is the real gain here; lifelong retirement payments for board members who have not yet been dethroned. To be fair one would have to acknowledge that these fine legislators can’t depend on any elder payments to supplement their income, so they have to set themselves up while still in office and before you send them packing. There should be no pension plan for board members.
It’s not bad enough that they have taken away all employee protection via resolution, fattened their wallets while mismanaging Tribal funds, removed Tribal members access to health care, assistance with health care costs, education assistance, elder meals, elder payments, funeral assistance, and a host of other cuts to the people. NOW they want our input? Give me a break.
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