Structuring Employee Severance/Separation Arrangements: Revisiting Section 409A and Its Impact on Deferred Compensation
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
ERISA
- event Date
Wednesday, December 8, 2021
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will provide counsel with guidance on structuring employee severance or separation agreements to comply with Section 409A's restrictions on deferred compensation. The panel will discuss key provisions of severance and separation agreements, application of Section 409A and available exemptions, accelerating the vesting of equity awards, and other key considerations.
Mr. Habeeb focuses his practice in the area of employee benefits and executive compensation. He counsels employers on various benefits arrangements, including health and welfare plans and qualified retirement plans. He advises plan sponsors and fiduciaries on compliance with applicable laws, including ERISA, the Internal Revenue Code, HIPAA, COBRA, and other regulations. He also has experience helping clients respond to compliance audits by the Department of Labor. Additionally, Luke has experience assisting clients with tax considerations and issues surrounding the drafting and administration of incentive plans, deferred compensation plans, and equity-based compensation arrangements.
Ms. Byrnes concentrates her practice in employee benefits and executive compensation law. She assists employers and executives with all aspects of their compensation and benefits packages. She counsels on the design, drafting, implementation and administration of retirement plans, health and welfare benefit plans, fringe benefit plans, SEP-IRAs, deferred compensation plans, and equity and equity-based compensation arrangements. She is a frequent speaker on employee benefits topics.
Drafting agreements when an executive is currently operating in a company can be complicated. These arrangements often involve negotiating separation pay, the continuation of benefits, and treatment of other compensation such as equity grants.
In addition, most severance arrangements are potentially subject to Section 409A and must be appropriately structured to avoid adverse tax consequences. Failure to comply with 409A's strict rules can result in severe penalties, including a 20 percent excise tax and immediate taxation of vested deferred amounts.
Listen as our experienced panel of employee benefits attorneys explains the critical requirements of 409A and discusses the steps counsel should take to ensure compliance given the IRS focus. The panel will outline best practices for reviewing nonqualified deferred compensation plans, employment agreements, and other severance arrangements.
- 409A issues to be considered in severance plans and agreements
- Severance benefits subject to 409A
- Severance benefits exempt from 409A
- Impact of accelerating the vesting of equity awards upon termination of employment on 409A
- Discussion of change in control severance arrangements and "regular" severance for purposes of 409A
- Importance of the definition of "good reason" for 409A purposes
- Can severance benefits that are subject to 409A be conditioned on a release?
The panel will review these and other key issues:
- When can I cancel/replace/substitute a prior agreement for newly agreed to severance terms?
- Does 409A affect all severance plans and agreements?
- How does 409A impact the drafting of severance plans and agreements?
- What are some best practices for complying with 409A regulations as they relate to severance plans and agreements?
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