The Association for Advanced Life Underwriting says a compliance extension announced Tuesday should be a big help to professionals who work with nonqualified deferred compensation plans.
The Internal Revenue Service said Tuesday in IRS Notice 2007-78 that it will postpone enforcement of documentation rules related to Section 409A of the Internal Revenue Code 1 year, until Dec. 31, 2008.
The extension does not change the date when taxpayers must comply with Section 409A.
The AALU, Falls Church, Va., “consulted with its practitioners in the nonqualified plan arena, and it is clear that compliance of plan documents with the requirements of 409A regulations is … difficult, time-consuming and problematic for clients,” the AALU says in a comment on the IRS announcement. “While we worked vigorously with a broad-based coalition in urging an overall 1-year extension of the effective date, a 1-year extension for document compliance was by far our greatest priority.”
The 1-year document compliance extension represents a victory for deferred compensation plans, the AALU says.