Employee Release Provisions Present Section 409A Trap for the Unwary

If you regularly draft or review employment, change-in-control or severance agreements, you know it is a standard practice to condition payment of severance benefits or other compensation on the employee signing a general release of claims against the employer. What you may not realize is that conditioning benefits on the execution of a release may give rise to tax problems for the employer and the employee under Section 409A of the Internal Revenue Code.

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