New IRS Guidance Regarding 409A

Section 409A of the Internal Revenue Code imposes new restrictive Federal tax rules governing "nonqualified deferred compensation plans" and provides significant taxes on individuals who violate them. Among other requirements, Section 409A(b) prohibits:

• The use of offshore trusts (and other arrangements) in connection with amounts payable under a nonqualified deferred compensation plan; and

• The use of financial health triggers restricting assets to protect the payment of benefits under a nonqualified deferred compensation plan in connection with a change in the financial health of an employer (or other service recipient).