18 Sep Employment Separation Agreement Taxable
Similar problems can arise when negotiations on severance pay extend to another fiscal year. For example, a CEO will be offered a termination agreement on December 15, 2019 and provides for a period of 45 days with payment 10 days after the execution of the agreement by the CEO. Here, the CEO could immediately sign the agreement and receive the payment in 2019 or wait until the end of the counterpart period to sign 2020 and receive the payment. Choosing a given payment date that does not depend on the employee`s signature date can minimize potential issues related to Section 409A. Therefore, a possible solution in the example shown would be the organization of the agreement, so that payments take place 60 days after the date of termination of the CEO if the agreement is signed and not revoked. .