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ARTICLE · 12 OCTOBER 2006

Section 409A Update: IRS Extends Transition Relief Until December 31, 2007

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The saga of Section 409A of the Internal Revenue Code ("Section 409A") continues. We have previously written about Section 409A (see October 2005 and February 2006 Commentaries).

United StatesEmployment and HR
Daniel Hagen
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The saga of Section 409A of the Internal Revenue Code ("Section 409A") continues. We have previously written about Section 409A (see October 2005 and February 2006 Commentaries). The latest chapter is IRS Notice 2006-79, issued on October 4, 2006.

This Notice extends Section 409A transition relief to December 31, 2007, including the deadline for documentary compliance with Section 409A. Prior to the Notice, the deadline was December 31, 2006.

Under Notice 2006-79:

  • Most transition relief, as described in Notice 2005-1 and the preamble to the Proposed Regulations issued in September 2005, also has been extended one year. For example, subject to certain rules, a plan may continue to be amended to provide for new payment elections by plan participants through December 31, 2007.

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