IRS Issues Correction Guidance For Certain 409A Violations

The latest round of guidance pertaining to Internal Revenue Code (IRC) § 409A (§ 409A) provides transition relief and correction procedures for certain inadvertent violations of the rules governing nonqualified deferred compensation plans. Under Notice 2007-100, certain unintentional operational failures can be corrected without penalty if the correction is made in the same taxable year that the failure occurs. Documentary failures and intentional or egregious operational failures are not eligible for relief under the program. Errors that may be eligible for correction in the same tax year under the notice include failures to defer amounts of nonqualified deferred compensation that should have been deferred, payments made to specified employees in violation of the six-month delay rule, and excess deferrals. To take advantage of this correction relief, the employer must comply with certain reporting