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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Megan, can we say that employee service award is also 409A

Customer Question

Megan, can we say that employee service award is also 409A compensation?
Submitted: 2 years ago.
Category: Finance
Expert:  Megan C replied 2 years ago.

Megan C :

Hello. Thanks for requesting me directly

Megan C :

If the employee service is earned in one year, but paid in another then yes - you could say that the service award is 409A compensation and treat as such.

Megan C :

Section 409(A) covers all forms of compensation that are earned in one year, but deferred until another tax year. There are some exceptions, such as 401(k) plans, vacation pay, sick leave, disability, etc - but service awards are not among those listed as an exception. Further if the deferral is short term, paid within 2 1/2 months after year end, then that is excluded from the section as well.