IRS Extends Section 409A Compliance Date – But Most Employers Must Take Action Prior to December 31, 2007
 
September 24, 2007
 
David O'Leary - Chicago

Section 409A of the Internal Revenue Code imposes significant restrictions on the payment of deferred compensation under severance plans, equity compensation plans, executive employment agreements and other agreements. On September 10, 2007, the Internal Revenue Service issued Notice 2007-78, extending the document compliance date from December 31, 2007, to December 31, 2008. Unfortunately, the notice only extends the date that the amendments to the documents must be drafted in order for the plan or arrangement to comply with Section 409A. The notice does nothing to extend the time by which decisions regarding plan design must be made or deferral elections changed. In addition, beginning January 1, 2008, all plans and arrangements must be operated in full compliance with Section 409A – even if the plan documents have not been updated.

In order to take advantage of significant planning opportunities, it’s important to act quickly to review your plans and arrangements prior to the December 31, 2007, deadline.

For more information, email David O’Leary at David.Oleary@hklaw.com or call toll free, 1-888-688-8500.