Alert October 01, 2007

IRS Provides Comprehensive 409A Transition Relief

On October 22, 2007 the Internal Revenue Service issued Notice 2007-86 which provides additional transition relief under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).  Section 409A is the tax provision applicable to non-qualified deferred compensation arrangements, including deferred compensation plans, SERPs and certain severance and bonus arrangements.  Specifically, the Notice provides a comprehensive extension to December 31, 2008 to adopt amendments to deferred compensation arrangements that are subject to Section 409A.  It is important to note, however, that all deferred compensation arrangements that are subject to Section 409A will continue to be subject to good faith compliance with Section 409A through this additional transition period.