MMC Benefits Handbook
Tax Implications if Non-Compliant with IRC Section 409A
If the IRS were to determine that the BEP, SRP, J&H Excess Plan, Sedgwick Excess Plan, ORC Excess Plan or any other similar non-qualified plan is not compliant with Section 409A, you could be subject to: (1) immediate taxation on your unpaid 409A SRP Benefit; (2) a 20% excise tax penalty on your unpaid 409A SRP Benefit; and (3) interest charges computed at the underpayment rate plus 1% based on the underpayment that would have occurred had the 409A SRP Benefit accruals been included in gross income when they accrued.