Spotting Section 409A Issues in Executive Separation Agreements

When an executive's employment is terminated, the executive is often asked to sign a separation agreement. Typically, in these agreements an executive waives potential claims against his or her employer in return for severance and other benefits. Advisers for employers and executives in this situation should be aware of potential issues under Section 409A of the Internal Revenue Code. Ensuring strict compliance with the detailed Section 409A rules in these situations can be quite complex. After providing a brief background on Section 409A, this article briefly describes potential Section 409A issues advisers should look for in these situations.