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

October 23, 2007

 On October 22, 2007, the IRS issued Notice 2007-86 which extends to December 31, 2008 the transition relief for compliance with Section 409A, which relief was scheduled to expire on December 31, 2007. During 2008, taxpayers are not required to comply with the requirements of the final regulations. Further, taxpayers may not rely on the proposed regulations during 2008, except for those provisions enumerated in Notice 2007-86. Taxpayers are, however, required to operate their deferred compensation plans in compliance with the terms of the plans so long as those terms comply with Section 409A and guidance related thereto. To the extent an issue is not addressed in the guidance issued to date, reliance on the final regulations will be treated as applying a reasonable, good faith interpretation of Section 409A.
 
For questions regarding the effect of Section 409A on your deferred compensation arrangements, severance agreements, employment agreements, or other nonqualified plans, please contact Christine Burke Worthen, a shareholder and Chair of Eaton Peabody's Tax Practice Group. 
  
This alert is provided as general information, and is not a substitute for legal or other professional advice.