Section 409A and Taxes Clause Samples
The Section 409A and Taxes clause defines how deferred compensation arrangements in the agreement will comply with Section 409A of the Internal Revenue Code, which governs the taxation of nonqualified deferred compensation. This clause typically outlines the employer’s and employee’s responsibilities to ensure that any payments or benefits are structured to avoid adverse tax consequences, such as additional taxes or penalties. By addressing compliance with Section 409A, the clause helps prevent unexpected tax liabilities for the employee and ensures the agreement adheres to federal tax regulations.
Section 409A and Taxes. All forms of compensation paid to Employee by the Company, including any payments made pursuant to this Agreement, are subject to reduction (or payment by Employee, to the extent that additional amounts are required) to reflect applicable withholding and payroll taxes and other applicable deductions. Employee agrees that the Company does not have a duty to design its compensation policies in a manner that minimizes his tax liabilities, and Employee will not make any claim against the Company related to tax liabilities arising from his compensation. The payments and benefits under this Agreement are intended, and will be construed, to be exempt from or comply with Section 409A; provided, however, that nothing in this Agreement shall be construed or interpreted to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Section 409A) from Employee to the Company or to any other entity or person. Any payment to Employee under this Agreement that is subject to Section 409A and that is contingent on a termination of employment is contingent on a “separation from service” within the meaning of Section 409A. To the extent the period during which Employee may review and execute a Release Agreement begins in one taxable year and ends in a second taxable year, to the extent required to comply with Section 409A, any payments subject to Section 409A will not be made or commence until the second taxable year. If, upon separation from service, Employee is a “specified employee” within the meaning of Section 409A, any payment under this Agreement that is subject to Section 409A and triggered by a separation from service and would otherwise be paid within six months after Employee’s separation from service will instead be paid in the seventh month following such separation from service or, if earlier, upon Employee’s death (to the extent required by Section 409A(a)(2)(B)(i)). Each installment of severance pay or compensation hereunder is considered a separate payment for purposes of Section 409A. Any taxable reimbursement due under the terms of this Agreement shall be paid no later than December 31 of the year after the year in which the expense is incurred, and all taxable reimbursements and in-kind benefits shall be provided in accordance with Treas. Reg. § 1.409A-3(i)(1)(iv). The Parties agree that if necessary to avoid non-compliance with Section 409A, they will cooperate in good faith to modify the terms of this Agree...
Section 409A and Taxes. To the extent that there are any 409A tax implications, it is intended that the payments above, and the timing thereof, shall comply with Section 409A of the Code (and any regulations and guidelines issued thereunder), the Severance Agreement and this Attachment A shall be interpreted on a basis consistent with such intent. Payments shall only be made on an event and in a manner permitted by Section 409A of the Code. This Severance Agreement and this Attachment A may be amended with your consent in any respect deemed by the Company to be necessary in order to preserve compliance with Section 409A of the Code. By signing this Agreement, I acknowledge and agree that I am solely responsible for the payment of any taxes imposed on me for any shares, money, or anything else of value paid or transferred under the Agreement.