IRS Issues Final Regulations under Section 409A: Short-Term Deferrals, Severance Pay, Performance-Based Compensation, and Distributions

On April 10, 2007, the IRS issued final regulations (Final Regulations) relating to nonqualified deferred compensation plans under section 409A of the Internal Revenue Code, as amended (the Code). Our first LawFlash on this issue, released on April 13, 2007, set forth the highlights of the Final Regulations.

This second LawFlash highlights the rules with respect to severance pay, performancebased compensation, 401(k) wrap plans, and other deferred compensation plans tied to a qualified plan, distributions, and termination of nonqualified deferred compensation plans. We will release a third LawFlash addressing issues raised in the Final Regulations in the area of equity compensation plans.We also anticipate issuing a LawFlash on the effects of section 409A on splitdollar life insurance policies.

For the full story, please view the PDF.