According to the league, Payton ignored instructions from the NFL and Saints ownership to make sure bounties weren't being paid. The league also chastised him for choosing to "falsely deny that the program existed," and for attempting to "encourage the false denials by instructing assistants to 'make sure our ducks are in a row."'
Goodell also banned Saints general manager Mickey Loomis for the first eight regular-season games next season, and assistant coach Joe Vitt for the first six games.
Vitt, a former Eagles assistant, is a native of Blackwood, N.J., and a graduate of Highland High School.
In addition, Goodell fined the Saints $500,000 and took away their second-round draft picks this year and next.
After the NFL first made its investigation public on March 2, Williams admitted to - and apologized for - running the program while in charge of the Saints' defense from 2009-11. He was hired by the Rams in January.
Goodell will review Williams' status after the forthcoming season and decide whether he can return to the league.
The Saints now must decide who will coach the team while Payton, also a former Eagles assistant coach, is barred (his suspension is effective April 1) and who will make roster moves while Loomis is out.
After the NFL made clear that punishments were looming, Payton and Loomis took the blame for violations that they acknowledged "happened under our watch" and said Saints owner Tom Benson "had nothing to do" with the bounty pool, which reached as much as $50,000 in 2009, the season the Saints won the Super Bowl.
Saints quarterback Drew Brees reacted quickly to the news on Twitter, writing: "I am speechless. Sean Payton is a great man, coach, and mentor . . . I need to hear an explanation for this punishment."
The NFL said the scheme involved 22 to 27 defensive players; targeted opponents included quarterbacks Aaron Rodgers, Cam Newton, Brett Favre and Kurt Warner. "Knockouts" were worth $1,500 and "cart-offs" $1,000, with payments doubled or tripled for the playoffs.
According to the league, Saints defensive captain Jonathan Vilma offered $10,000 to any player who knocked then-Vikings QB Favre out of the 2010 NFC championship game.
In a memo sent out to the NFL's 32 teams, Goodell ordered owners to make sure their clubs are not offering bounties now. Each club's principal owner and head coach must certify in writing by March 30 that no pay-for-performance system exists.
