The 409A Transition Rule Lives to Fight Another Day:IRS Extends Final Section 409A Compliance Date in Notice 2007-86


There’s relief and then there’s relief. Having seen the former in Notice 2007-78 – which provided a rather limited extension of the documentation requirements imposed by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) – we are in a much better position to appreciate the latter, coming in the form of Notice 2007-86.[1] With the demise of the “transition rule” available

under Section 409A looming at year-end, the IRS has now taken mercy on countless non-compliant deferred compensation arrangements in need of its assistance and given the transition rule an extra year of life. In a welcome change of pace, Notice 2007-86 offers a fairly straightforward extension of the Section 409A requirements that were not addressed by Notice 2007-78 and offers some useful guidance for compliance during the transition period. However, while Notice 2007-86 provides a

workable path to Section 409A compliance in most instances, it does not solve every Section 409A problem nor does it provide a “free pass” on operational compliance prior to January 1, 2009.

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