WASHINGTON – CUNA also recommended expanding severance plans exceptions. Plans which are amended on or before December 31, 2005 to conform to the provisions of Section 49A are exempt from the requirements of 409A during the calendar year 2005 with respect to such severance pay benefits as long as the plan is "either a collectively bargained plan or covers no service providers who are key employees." "Section 409A should not apply to typical severance arrangements," Orr wrote. "Severance pay is designed to provide a temporary source of income to employees who are involuntarily terminated. This directly contradicts the purpose of severance pay."

Continue Reading for Free

Register and gain access to:

  • Breaking credit union news and analysis, on-site and via our newsletters and custom alerts.
  • Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders.
  • Educational webcasts, white papers, and ebooks from industry thought leaders.
  • Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.