• IRS Notice 2007-78 Provides Some 409A Relief, But Operational Comliance Required
  • October 29, 2007 | Authors: Melanie J. Gnazzo; Paul D. Carman
  • Law Firms: Chapman and Cutler LLP - San Francisco Office ; Chapman and Cutler LLP - Chicago Office
  • The IRS recently released Notice 2007-78, which provides transition relief and additional guidance on the application of Section 409A of the Internal Revenue Code to nonqualified deferred compensation plans. Non-qualified deferred compensation plans are defined very broadly for the purposes of Section 409A and may include arrangements such as employment agreements and change of control agreements in addition to traditional nonqualified plans providing for deferral of cash compensation or deferred receipt of vested stock units. Under Notice 2007-78, employers must be prepared to comply operationally with Section 409A after December 31, 2007, even if the amendment of plan documentation is delayed. Therefore, officers and directors should review existing plans now to determine what operational changes need to be made and disclosed to participants prior to year end.