• Last Chance to Correct Nonqualified Deferred Compensation Plan to Comply With Section 409A Violations
  • December 7, 2010 | Author: Roberta G. Granadier
  • Law Firm: Butzel Long - Detroit Office
  • Internal Revenue Code Section 409A dramatically changed the landscape of nonqualified deferred compensation programs and certain equity compensation arrangements by imposing restrictions on the timing and distribution of deferrals and other payments. Although Section 409A was enacted in late 2004, employers could comply with various good faith compliance standards for plan operation through December 31, 2007 when plans were required to satisfy Section 409A in both form and operation. Penalties for Section 409A violations include immediate taxation and interest plus a 20% excise tax imposed on affected participants (generally executives or directors).