Practical Law Glossary Item 4-502-9987 (Approx. 3 pages)
Glossary
Specified Employee
For purposes of Section 409A of the Internal Revenue Code (Code) (Section 409A), a specified employee is a key employee of a publicly traded company. Specified employees are generally employees that satisfy any of the following conditions:
They own more than 5% of their employer's stock.
They own more than 1% of their employer's stock and receive annual compensation greater than $150,000.
They are among the 50 most highly compensated officers of their employer and earn annual compensation greater than the indexed threshold of $185,000 (for 2020).
If deferred compensation is paid to a specified employee in connection with the employee's separation from service, the payment must be delayed for six months following the separation from service (or, if the specified employee dies during the six-month period, until his death). The six-month delay requirement only applies to deferred compensation and therefore does not apply to amounts that fall under an exclusion, for example, amounts that are exempt as "short-term deferrals."