Section 409A Specified Employee Compensation Definition Checklist

Summary

This checklist sets forth the rules for a compliant compensation definition for identifying the so-called specified employees of public companies who are subject to the six-month delay rule under I.R.C. § 409A and the regulations issued thereunder (Section 409A). Generally, under this rule a nonqualified deferred compensation arrangement subject to Section 409A must delay payments made upon a separation from service for at least six months following the date of separation. Applying compensation-based thresholds and compensation-based ranking for specified employee testing is a part of the process companies must undertake to identify which individuals are subject to the six-month delay rule as a result of having specified employee status.