409A: What You Do (and Don’t) Need to Consider Before Year-end

In the last few weeks of the year, employers may wish to review their compensation arrangements (including traditional nonqualified deferred compensation plans, discounted stock options and other covered arrangements) that are subject to Section 409A of the Internal Revenue Code to determine whether any last-minute compliance is required. As described in our previous Cooley Alerts, certain "transition relief" provided to employers by IRS and Treasury Department guidance is available only until December 31, 2005. This Alert reiterates the actions employers may wish to consider prior to December 31, 2005, and describes recent guidance on 2005 tax reporting under Section 409A. Click on the following links for Cooley Alerts describing the background and enactment of Section 409A and current guidance from the IRS and Treasury.