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New 409A Guidance On Nonqualified Deferred Compensation Plans: Compliance Strategies for Employee Benefits Counsel

On June 21, 2016, the Internal Revenue Service issued proposed 409A regulations, which clarify and amend the final regulations under Section 409A issued in 2007 and the proposed income inclusion regulations issued in 2008.

The 2016 proposed regulations offer new guidance related to: (1) the reach of Section 409A (such as offering clarity on what a “payment” means under the statute), (2) the exemptions under Section 409A (such as relaxed rules under the short-term deferral exemption and clarifications under the severance pay plan exemption), (3) the permitted payment events that comply with Section 409A (such as payments on death, separation from service, or under certain earn-outs or escrows in mergers), and (4) the remedies or solutions available, or unavailable, if an arrangement violates Section 409A (such as narrowing the ability to correct unvested noncompliant payments).

Benefits counsel must understand the impact of the new guidance on nonqualified deferred compensation plans in order to advise their clients on compliance best practices.

Listen as our panelists highlight the important modifications under the new 409A regulations and strategies for compliance. Additionally, the panel will discuss questions that remain unanswered, and new questions that arise.