December 31, 2012 Deadline To Correct Certain Section 409A Payment Timing Errors

December 31, 2012, is the deadline for correcting certain errors in the written provisions of nonqualified deferred compensation arrangements that provide payments that are contingent on the recipient's execution of a release of claims, or a restrictive covenant agreement or similar document. These errors can occur in any type of deferred compensation arrangement, including severance, nonqualified retirement programs, employment agreements, change-in-control payments, and deferred equity awards. Employers should identify and revise noncompliant agreements by the deadline to avoid potentially significant penalties to the employee or other service provider under section 409A of the Internal Revenue Code of 1986, as amended ("section 409A"), including accelerated inclusion for federal income tax purposes, a 20 percent federal excise tax (and potentially an equivalent state tax), and a federal interest penalty, unless submitted through a correction program that requires