IRS rules certain stock appreciation rights are exempt from Code Sec. 457A

The IRS has ruled that although stock appreciation rights are generally subject to Code Sec. 457A, a stock appreciation right that at all times by its terms must be settled, and is settled, in service recipient stock is exempt from Code Sec. 457A, as is a nonstatutory stock option. Prior guidance issued under Notice 2009-8 has been amplified. A stock appreciation right that may be or is settled other than in service recipient stock is not exempt from Code Sec. 457A, regardless of whether the stock appreciation right is a nonqualified deferred compensation plan for purposes of Code Sec. 409A, the IRS ruled.

Source: IRS Rev. Rul. 2014-18.
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