• Proposed Regulations Clarify Application of Section 409A of Internal Revenue Code to Foreign Benefit Arrangements
  • October 26, 2005
  • Law Firm: Pillsbury Winthrop Shaw Pittman LLP - Office
  • On September 29, 2005, the Internal Revenue Service (IRS) publicly issued its long-awaited proposed regulations under Section 409A of the Internal Revenue Code (Code). Section 409A, which was enacted as part of the American Jobs Creation Act of 2004, established new procedural and substantive requirements for nonqualified deferred compensation plans and arrangements. This Client Alert discusses the key provisions of the proposed regulations applicable to foreign benefit arrangement and related issues raised by the proposed regulations. The proposed regulations clarify, among other things, that certain non U.S. plans and arrangements and certain arrangements with non-U.S. residents are excluded from Section 409A's scope. The proposed regulations also set forth conditions for the exclusion of which stock options and stock appreciation rights to foreign stock.