07/01/2007
Preparing for Year-End 2007 Compliance with Section 409A
With the issuance of final regulations under Section 409A of the Internal Revenue Code, the January 1, 2008 effective date of these regulations gives employers a relatively brief period in which to bring the documents setting forth plans, arrangements, awards and individual agreements (collectively, “Plans”) into compliance with Section 409A. The broad categories of Plans covered by Section 409A are as follows:
- stock rights (for example, deferred compensation settled in shares, restricted stock units or phantom stock, discounted stock options and discounted stock appreciation rights)
- separation pay arrangements (plans and individual agreements providing severance benefits, including those payable upon or after a change in control)
- account balance plans (deferred compensation arrangements expressed in the form of individual account balances, including supplemental executive retirement plans utilizing individual account balances)
- non-account balance plans (individual arrangements and supplemental executive retirement plans expressing a benefit in terms of a defined benefit formula)
- reimbursement plans (plans and individual agreements providing for taxable expense reimbursements)
The Compensation & Benefits Group at Cooley is prepared to work with you to identify and, where necessary, amend Plans in all of the above categories. However, given the breadth of application of Section 409A and the large number of clients we serve, we would like to schedule such work over the remaining months of the year. Therefore, if you would like us to assist you with amendments to your Plans required by Section 409A, please contact your regular attorney in the Group so that we may begin this process.