3544 / What are the minimum plan documentation requirements for a private nonqualified deferred compensation plan under IRC Section 409A?
As to Section 409A:
1. The plan must be in writing, but there are no IRS prototype plans available as is the case for qualified plans. In effect, a plan is in violation of Section 409A if it is a covered arrangement but not in writing. However, the plan may be in more than one document, such as a plan and joinder agreement. The IRS will currently not issue letter rulings in regard to 409A.1
This also suggests that plans claiming exception from 409A ought to be in writing to make the exception from coverage clear if audited. There are indications that the IRS auditors are asking for an identification of those plans that are covered and those claiming a 409A coverage exception to include the relevant exception and justification in pre-audit requests.2
2. The plan must state either the amount of the deferred compensation or the method for calculating the amount and the plan also must state the time and form of payment distribution, which would include: