U.S. Tax Code Section 409A Sample Clauses

U.S. Tax Code Section 409A is a federal tax provision that governs the timing and taxation of deferred compensation arrangements for employees and service providers. It sets strict rules on when deferred compensation can be paid and requires that such plans be documented and administered in compliance with its requirements, such as specifying payment events and prohibiting accelerated payments. The core function of Section 409A is to prevent the manipulation of deferred compensation to defer taxes improperly, thereby ensuring that income is taxed at the appropriate time and reducing the risk of tax avoidance.