As long as the payment is properly documented and classified as a short-term deferral, it is tax-exempt, even if the payment is delayed beyond the applicable 2-month and 2-month period, where a previous payment is administratively inoperable due to unforeseen circumstances, if the payment before the date set in the plan would expose the payer to financial risk or if the payment in a timely manner would not have made the payment deductible unpredictably as offsetting surpluses under the dembgb162 (m) of internal revenue (“code”). On the basis of practice, this means that an employer should consider requiring in writing that payment be made during this period with respect to any agreement that defers compensation if a payment is contemplated within the short-term deferral period. In this way, the payment of deferred compensation beyond this short-term deferral period cannot constitute a violation of Section 409A. As noted above, one of the authorized payment dates is the separation of the service. However, in the case of a top 50 public servant or certain major shareholders of a public company, Section 409A provides that the payment of deferred compensation to be paid in the event of separation of service must be delayed by at least six months after the separation of service. Unless derogated, such as the short-term waiver, it constitutes a violation of Section 409A if payment to a top 50 official is made at the time of termination of the employee`s working relationship. This is clearly a trap for the unwary. Separation pay is exempt from Section 409A requirements, to the extent required under a foreign plan, even if payments are made after a voluntary separation. As a general rule, a foreign separation compensation plan applies only to foreign income within the meaning of Section 911 (b) (1), but excluding amounts paid after the end of the fiscal year in which the services on which the amounts relate were established. As a general rule, the employer separates from the service after death, retirement or any other termination of employment. Where an employment agreement or separation agreement provides for payment in the event of a “separation of service”, either failure to make a payment in the event of a section 409A separation, or a payment triggered in the absence of a section 409A separation, could result in the triggering of an excise duty.