7Compliance with Code Section 409A Sample Clauses
The "Compliance with Code Section 409A" clause ensures that any compensation or benefits provided under the agreement adhere to the requirements of Section 409A of the Internal Revenue Code, which governs the taxation of deferred compensation. This clause typically outlines procedures to structure payments, such as timing and form of distributions, to avoid triggering additional taxes or penalties for the recipient. Its core function is to protect both the employer and employee from unintended tax consequences by ensuring the agreement is structured in accordance with federal tax law.
7Compliance with Code Section 409A. The Employer and the Executive intend that the Agreement comply with the provisions of Code Section 409A to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year prior to the year in which amounts are actually paid to the Executive or Beneficiary. This Agreement shall be construed, administered and governed in a manner that affects such intent, and the Administrator shall not take any action that would be inconsistent therewith.