Section 409A imposes requirements on nonqualified deferred compensation plans. IRS issued final regulations in 2007 that defined nonqualified deferred compensation, established certain exclusions, and provided rules for the timing of deferral elections and payments. In 2008, IRS issued proposed regulations on the calculation of amounts includible in income if the requirements of section 409A were not met. IRS has now issued proposed regulations clarifying and amending portions of the final regulations as well as the proposed income inclusion regulations. Taxpayers can rely on these proposed regulations immediately. Until final regulations are published, IRS will not take a position contrary to the proposed regulations. Also, the proposed regulations provide that certain positions can no longer be taken by taxpayers, even though these regulations have not been finalized.
US Tax Marketing Leader, PwC US