Final Reviews Due Now for Deferred Compensation Plans
December 16th, 2008 | By Paul ChernerSection 409A of the Internal Revenue Code has made substantial changes to the manner in which certain forms of deferred compensation need to be handled. The IRS issued final regulations that require that any changes to deferred compensation arrangements that may be needed to comply with the requirements of 409A to be made by no later than December 31, 2008.
If it has not already been done, it is imperative that there be a legal review of deferred compensation arrangements to determine whether they are covered or exempt from these regulations. If they are covered, then there should be a determination as to whether they can be changed to fit within an exemption to 409A or whether there needs to be an amendment to these plans to ensure that they are compliant with the complex requirements of that law. A failure to be in compliance may result in substantial adverse monetary consequences.
The type of agreements that should be reviewed include, but are not limited to:
- Severance pay plans or agreements
- Annual bonus and incentive plans
- Stock options
- Deferred compensation plans, agreements or arrangements
- Supplemental Executive Retirement Plans (SERPs)
- Change of Control Agreements
- Phantom stock plans
- Restricted stock, restricted units and other equity-type awards
- Stock Appreciation Rights
The final countdown has begun. Don’t wait till New Year’s Eve to learn that there is a problem with these type of arrangements.
