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Compensation Planning Journal
The following were originally printed in BNA Tax Management's Compensation Planning Journal, a monthly journal which is part of the BNA Tax and Accounting Center.
| Volume 36 Number 11
Friday,
November 7, 2008
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Addressing Foreign
Plan Issues Under
§409A
by Sandra W. Cohen, Esq.*
Osler, Hoskin & Harcourt LLP
New York, New York
Deferred compensation is under review with a penetrating microscope in the United States. Employers, employees, tax practitioners, and the IRS are scrutinizing compensation arrangements to see if they meet the very broad definition of “deferred compensation” under §409A, which became generally effective for amounts deferred after December 31, 2004.1 If they do, then the arrangements must meet a strict set of payment timing rules under §409A or face harsh penalties. Although these rules are already in effect for plan operations, the deadline for compliance with the written requirements of §409A is December 31, 2008.
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Section 409A and Payments of Deferred Compensation in Connection with a Corporate Transaction
by Daniel L. Hogans, Esq.
Morgan, Lewis & Bockius, LLP
In the not too distant past, restructuring or renegotiating executive compensation arrangements in connection with a change in control was a relatively straightforward proposition. Certainly, there were “golden parachute” consequences under §280G to worry about, and §162(m) consequences could give some pause, but these issues were mostly manageable and usually did not interfere excessively with getting to the right business result.
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New Proposed §457(f) Regulations Expected Soon
In Notice 2007-62, the IRS announced that it would issue guidance under §457(f) that would deal with the definition of “substantial risk of forfeiture” and other matters to largely adopt the definitions used under §409A. Notice 2207-62 also indicated that those regulations would be prospective when issued. The issuance of guidance under §457(f) has been on the Treasury/IRS guidance plan for the last two years.
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IRS Issues Updated EPCRS Procedures
On August 14, 2008, the IRS issued Rev. Proc. 2008-50, 2008-35 I.R.B. 464, to update and expand the voluntary correction programs for retirement plans that are available under the Employee Plans Compliance Resolution System (EPCRS), which includes the Self-Correction Program (SCP), the Voluntary Correction Program (VCP) and the Audit Closing Agreement Program (Audit Cap). Rev. Proc. 2008-50 modifies and supersedes its predecessor, Rev. Proc. 2006-27, and is generally effective January 1, 2009. However, plan sponsors may apply the provisions of Rev. Proc. 2008-50 beginning on or after September 2, 2008.
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