The Internal Revenue Service has pushed back the date when employers must comply with the new Section 409A deferred compensation plan regulations.
The IRS will be extending transition relief for affected taxpayers to Dec. 31, 2008, from Dec. 31, 2007.
The change, announced in IRS Notice 2007-86, will affect sponsors of nonqualified deferred comp plans and those plans advisors.
Section 409A of the Internal Revenue Code, added by the American Jobs Creation Act of 2004, imposes a variety of new requirements on executive compensation arrangements, including deferred comp plans that do not qualify for the same types of tax breaks that apply to 401(k) plans and other retirement plans.
The IRS released proposed 409A regulations in 2005 and final regulations earlier this year.
In 2008, under the terms of the new compliance extension, “taxpayers are not required to comply with the requirements of the final regulations,” IRS officials write in Notice 2007-86. “Instead, they are required to operate a nonqualified deferred compensation plan in compliance with the plan’s terms, to the extent consistent with Section 409A and the applicable guidance.”