Section 409A Deadline Ahead: Current Action Required

Originally published January 24, 2008

Keywords: Section 409A, Internal Revenue Code, nonqualified deferred compensation plans, bonus arrangements, fringe benefit arrangements, expense reimbursement arrangements.

Section 409A of the Internal Revenue Code imposes significant requirements with respect to nonqualified deferred compensation plans. It applies to amounts deferred on or after January 1, 2005. The IRS provided a lengthy transition period and issued final regulations under section 409A in 2007. The transition period, which was originally set to expire at the end of 2007, was extended through 2008. Beginning on January 1, 2009, however, all nonqualified deferred compensation plans must be in full compliance with section 409A, the final regulations and other applicable guidance. For a more complete review of the final regulations, see "How the Final Section 409A Deferred Compensation Rules