IRS Extends Section 409A Transition Relief To December 31, 2008

On October 22, 2007, the IRS and the Treasury Department issued Notice 2007-86 (the "Notice") extending to December 31, 2008 certain transition relief regarding the application of Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A") to nonqualified deferred compensation plans. The Notice is a welcome expansion of the more limited relief provided by Notice 2007-78, published only six weeks ago, which extended the time for plan sponsors to adopt formal plan amendments to comply with Section 409A, but had required full operational compliance with the final regulations by January 1, 2008.

Extension of Transition Relief

Plans subject to Section 409A are not required to fully comply with the final Section 409A regulations during 2008. Instead, plans or other covered arrangements (referred to herein as "plans") must be operated in accordance with their terms, to the extent consistent with, and in good faith compliance with Section 409A, and the "applicable