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Employment Agreement Plans

Providing Compliant Employment Agreements

Employment agreements are a common tool for establishing clear provisions and expectations between employers and employees. Despite their ubiquity, they often include promises that can't be fulfilled without causing adverse tax consequences.

We help you to ensure that your organization's employment agreements deliver the promised employee benefits (e.g., retiree health benefits or deferred compensation) to your employees in ways that comply with the applicable tax laws.

The team at Employee Benefits Law Group can help you create employment agreements that avoid tax pitfalls and remain fully compliant with regulations like those found under Code section 409A. We can also evaluate an existing employment agreement and help make corrections that address any noncompliance.

We can provide you with employment agreements that protect your enterprise as well as its key personnel. Our team understands all tax aspects of employment agreements, including deferred compensation, severance payments, special medical reimbursements and retiree health. Working with us helps avoid these common problems, among others:

  • Deferred compensation that violates Code section 409A or 457.
  • Severance payments that are subject to Code section 409A without satisfying its requirements (e.g., through a faulty release provision).
  • Medical reimbursements or retiree health that results in the full amount of the benefits received being taxable.

"Although some clients may be surprised to learn that certain provisions in their employment agreements are subject to Code section 409A's rigorous requirements on deferred compensation arrangements, they are pleased when we are able to conclude that those provisions are already in compliance or, if not, when we can utilize the IRS's correction procedures to bring them into compliance."

– Ken Ruthenberg, Employee Benefits Law Group Shareholder