Relief for Correcting Certain Internal Revenue Code Section 409A Failures Expires This Year

The Treasury Department and the IRS have provided favorable transition relief for correcting arrangements that impermissibly condition the payment of nonqualified deferred compensation on a service provider's completion of certain employment-related actions (such as the execution of a non-competition agreement, non-solicitation agreement or release of claims). This relief will expire on December 31, 2012. The issue primarily involves arrangements where payments are made upon execution of an agreement or when an agreement (such as a release) becomes effective and there is no specific payment date so that the timing of signing the agreement can impact the date amounts are paid.

Background