IRS Issues Final Section 409A Regulations Affecting Deferred Compensation Arrangements / December 31, 2007, Deadline For Amending Documents
May 2007
In November 2004, November 2005, and October 2006, we sent to you advisories concerning the requirements of Section 409A of the Internal Revenue Code, enacted by Congress as a part of the American Jobs Creation Act of 2004. We summarized the modifications that the new law would require to deferred compensation arrangements. We also informed you of the IRS’s progress in developing regulations and its extensions of the deadlines for making amendments to noncompliant documents. Many of you may have been waiting to amend your documents until final regulations were issued.
The time for waiting has ended. In April, the IRS issued very lengthy and complex final regulations and reaffirmed that the deadline for amending deferred compensation documents is December 31, 2007. As we informed you in our earlier advisories, “deferred compensation” is very broadly defined and can include not only traditional deferred compensation arrangements, but also arrangements that have the effect of deferring compensation that may be found in employment agreements, salary continuation agreements, severance plans and agreements, performance bonus programs, expense reimbursement programs, change of control agreements, and stock options. All of those types of documents must be reviewed to determine if they provide for deferred compensation and, if so, whether they must be modified to conform to the new regulations.
If you would like assistance with reviewing your documents that may provide for deferred compensation and bringing them into compliance with Section 409A, please contact one of us.
Debra J. Linder
Direct Dial: 612-492-7163
Email: dlinder@fredlaw.com
John H. Merkle
Direct Dial: (612) 492-7027
Email: jmerkle@fredlaw.com
James B. Platt
Direct Dial: (612) 492-7047
Email: jplatt@fredlaw.com