Treasury And IRS Issue Final 409A Regulations

The U.S. Department of the Treasury and the IRS released long-awaited final regulations under Internal Revenue Code § 409A on Tuesday (April 10, 2007). Code § 409A was enacted as part of the American Jobs Creation Act of 2004 and it regulates a broad range of compensatory plans and arrangements that are lumped together under the heading of "non-qualified deferred compensation plans." Spanning some 398 pages, the final rule preserves much of the approach taken in prior guidance, but it also makes some important changes and enhancements. Key features of the new regulations include:

• Plan Aggregation Rules.
There are now nine categories or types of plans (up from four in the proposed regulation). This is important for determining which plans and arrangements of a particular participant are treated as violating Code § 409A as a result of a violation in another plan of the same type covering the same person.

• Definition of "Service Recipient Stock."