Regulators grant reprieve on 409A deadline
Bowing to requests from law firms and others, the Treasury has announced that the deadline for implementing the new 409A regulations for nonqualified deferred compensation plans has been extended for a year, until December 31, 2008.
Section 409A provides certain requirements applicable to nonqualified deferred compensation plans. If a plan does not meet those requirements, participants in the plan are required to immediately include amounts deferred under the plan in income and pay additional taxes on such income.
On September 10, 2007, the Treasury Department and the IRS issued Notice 2007-78, granting certain transition relief intended to facilitate compliance with the written plan requirements set forth in the final regulations. Commentators stated that although the Notice 2007-78 transition relief was helpful, the transition relief in that notice did not adequately address the need for additional time for service recipients and service providers to analyze all of their plans and make informed and reasoned decisions regarding the changes that would be necessary to bring existing arrangements into compliance with the final regulations.
The new transition relief has been issued as Notice 2007-86.
Law firms petition IRS for extra time for 409A regs