IRS Issues Proposed Regulations on Nonqualified Deferred Compensation

On September 29, 2005, the IRS issued long-awaited proposed regulations governing nonqualified deferred compensation plans.  The proposed regulations extend the period within which employers must amend their nonqualified deferred compensation plans to comply with Code Section 409A, provide detailed rules for determining whether an arrangement is subject to Section 409A, and address a variety of other issues.  Although compliance with the proposed regulations is not mandatory until tax years beginning after 2006, taxpayers may rely on the proposed regulations until final regulations are issued.  As a practical matter, most taxpayers will want to comply with the proposed regulations, retroactive to the effective date of Section 409A.  Learn more.