The Treasury Department and the Internal Revenue Service (IRS) announced Monday that taxpayers will have until December 31, 2008, to bring documents into compliance with the final nonqualified deferred compensation regulations under section 409A of the Internal Revenue Code.  Last April, the Treasury and IRS issued final 409A regulations, which provide guidance regarding the requirements for deferral elections and payment timing under section 409A.  Affected plans and arrangements were required to comply with the final regulations by December 31, 2007.

IRS Notice 2007-78 extends the document compliance deadline for one year and provides additional limited transition relief.  Importantly, the Notice does not postpone the January 1, 2008 effective date of the final regulations (which were already extended once; see BVWire #50-3). The Treasury and the IRS do anticipate issuing further guidance “containing a limited voluntary compliance program that will permit taxpayers to correct certain unintentional operational violations of § 409A and thereby limit the amount of additional taxes due under § 409A,” although the Notice does not indicate when to expect the additional guidance.