Code Section 409A Documentation Correction Program - Update Reflecting IRS Modifications

Employee Benefits Alert

This alert updates our Focus on Employee Benefits alert of November 4, 2010, with regard to executive compensation year-end compliance. In Notice 2010-80 issued on November 30, 2010, the IRS modified its guidance on certain failures of a nonqualified deferred compensation plan to comply with Code section 409A. Among other things, Notice 2010-80 provides transition relief from the service provider information reporting requirements for corrections made under the transition relief ending on December 31, 2010. Thus, in the case of a correction made on or before December 31, 2010 under the special transition relief provisions of § XI of Notice 2010-6, a service provider is no longer required to attach the information statement regarding the correction to his or her tax return, as previously required under Notice 2010-6. In addition, the service recipient is no longer required to provide the information statement to the service provider, although the service recipient must attach the information statement to its tax return with respect to the corrections. This additional reporting relief should facilitate corrections under § XI of the Notice 2010-6. We urge employers to consider whether they have any section 409A document corrections that should be made in 2010 in order to benefit from the more favorable rules in Notice 2010-6 for corrections in 2010.

For more information, please contact:

Fred Oliphant,, 202-626-5834

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