IRS Finalizes Section 409A Regulations for Deferred Compensation–Summary of Key Provisions
The final regulations under Section 409A of the Internal Revenue Code were issued on Tuesday, April 10. Section 409A was added to the Code by the American Jobs Creation Act of 2004 and establishes strict rules for payment of deferred compensation. Failure to comply with the regulations results in significant adverse tax consequences. The regulations must be considered when drafting any type of deferred compensation agreement, including severance plans.
Together, the preamble and regulations were 397 pages in length, and will certainly require an investment of time to digest completely. Lane Powell’s summary of the key provisions provides a starting point. View full article (PDF).