On October
22, 2007, the Internal Revenue
Service issued Notice 2007-86
extending the deadline for nonqualified
deferred compensation plans to be
amended to comply with the final
regulations under Internal Revenue Code
Section 409A to December 31, 2008.
Nonqualified deferred compensation plans
must, however, operate in good faith
compliance with IRC Section 409A prior
to this extended deadline. As way of
background, under Section
409A, nonqualified deferred compensation
plans must meet certain requirements
relating to the time and form of payment
of deferred compensation. If a plan
does not meet these requirements, the
participants in the plan must include
the deferred compensation in their gross
income when it is no longer subject to a
substantial risk of forfeiture and the
participants may be subject to penalties
and interest. A nonqualified deferred
compensation plan is interpreted broadly
and includes any plan, agreement, or
arrangement that provides for the
deferral of compensation, regardless of
whether the plan, agreement or
arrangement involves one person or a
group of people.
