IRS Extends Section 409A Compliance Date For Non-Qualified Deferred Compensation Arrangements

If you were wondering about the cheers coming from your tax lawyers on the afternoon of October 4, 2006, rest assured that they have some good news for you on the deferred compensation front. After delivering some tricky guidance under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code") last fall, the IRS has offered up a treat this year in the form of Notice 2006-79.¹

As readers of our prior Legal Updates will know, the compliance deadline for Section 409A, as imposed by the proposed Treasury regulations issued last fall, was to be January 1, 2007: by this date, all deferred compensation arrangements subject to Section 409A were supposed to have been updated and fully compliant in operation. However, in the absence of final regulations – which the IRS has been promising to deliver for some time now – it was becoming obvious that a delay was inevitable. Notice 2006-79 makes this delay official by extending the Section 409A compliance deadline to January 1,