409A Direct

409A Direct Employer Checklist

Information you’ll need to get started

Target start date?

Entity’s legal name?

State of incorporation?

Company structure?

Question 1

Target start date?

Question 2

Entity’s legal name?

Question 3

State of incorporation?

Question 4

Company structure?

Question 5

Who is your company’s Finance contact?

Question 6

Who is your company’s Human Resources contact?

Question 7

What is the entity’s total number of employees?

Question 8

Are there affiliate companies whose employees would be eligible to participate in the plan?

Who is your company’s Finance contact?

Who is your company’s Human Resources contact?

What is the entity’s total number of employees?

Are there affiliate companies whose employees would be eligible to participate in the plan?

Download the checklist

Determine the type(s) of nonqualified plan(s) you want to offer your key employees.

Deferred
Compensation Plan
This is a traditional long-term deferred compensation plan.
Supplemental Executive Retirement Plan (SERP)
A SERP is a company-paid benefit (defined contribution) designed to retain your executives until retirement.
Long Term
Incentive Plan (LTIP)
This is an incentive-based plan (employer contributions) that rewards your eligible key employees for reaching specific company goals.
Your eligible group can be based on any of the criteria below—

Decide how you want to determine your eligible group.

Remember that with 409A Direct, the minimum number of plan participants is 5
(plus the company must have at least 34 total employees).
Note: The maximum number of employees that can be on a 409A Direct DCP is 15% of your total number of employees.
For example, if you have 100 employees, your plan can have a total of 15 employees in the plan.
Total compensation
Employee class
Job title
Board of directors
Highly compensated employees*
Key employees

*Highly Compensated Employee (HCE): An employee whose compensation will total or exceed $160,000 in 2026.

What types of compensation can be deferred?

  • Salary
  • Bonus
  • Severance
  • Commission
  • Incentive compensation
  • Company contribution
  • 401(k) spillover
  • 401(k) spillover match
    (company contribution)

Determine whether participants can defer all or just a portion of the eligible compensation to offer your key employees.

The company can determine which of the following ways plan participants can defer their compensation—

Dollar
amount

Whole
percentage

Percentage in excess of a dollar amount

Percentage up to a dollar amount

Plan Funding

Taxable securities

Mutual
Funds

Nontaxable securities

Corporate-Owned
Life Insurance (COLI)

The 409A Direct platform uses only tax-favored COLI as the ideal form of plan funding.

Decide when your employees can receive their payouts. Payout options include—

Alternate Payout Elections

  • Specified Date
  • Separation of service
  • In-Service Distribution
  • Retirement
(at separation of service or when participant reaches retirement age)
  • Delayed separation of service
(separation of service, plus an additional number of years)
  • Disability
  • Survivor benefit
  • Change in control
See the Glossary in our Knowledge Center for full definitions of terms.

If you have any questions as you move through the process, please reach out to us by calling 813-776-6933 and ask for a 409A Direct Ambassador, or email clientservices@409ADirect.com.

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