The IRS just issued Notice 2006-79, which provides transition relief from the December 31, 2006 deadlines of IRC 409A. Specifically, this Notice provides further transition relief by:
- Generally extending until December 31, 2007, the transition relief provided in the preamble to the proposed regulations, except with respect to certain discounted stock options and stock appreciation rights granted to persons subject to the disclosure requirements of section 16(a) of the Securities Exchange Act.
- Extending until December 31, 2007, the deadline for amending nonqualified deferred compensation arrangements, provided they are operated through 2007 in reasonable, good faith compliance with IRC 409A. Compliance with the proposed regulations (or the final regulations once issued) continues to constitute reasonable, good faith compliance.
Finally, Notice 2006-79 announces that the final regulations under IRC 409A will not become effective until January 1, 2008. This Notice does not address the W-2 reporting requirements related to 409A, and it remains to be seen whether the IRS will defer this requirement as it did for 2005.
ANY TAX ADVICE HEREIN WAS NOT INTENDED OR WRITTEN BY THE AUTHOR TO BE USED, AND IT CANNOT BE USED BY ANY RECIPIENT, FOR THE PURPOSE OF AVOIDING ANY TAX PENALTIES THAT MAY BE IMPOSED ON ANY PERSON. THERE IS NO LIMITATION IMPOSED ON A RECIPIENT HEREOF BY THE AUTHOR HEREOF ON DISCLOSURE OF THE TAX TREATMENT OR TAX STRUCTURE OF ANY TRANSACTION. EXCEPT WITH PRIOR WRITTEN CONSENT OF THE AUTHOR, NOTHING HEREIN MAY BE USED OR REFERRED TO IN PROMOTING, MARKETING OR RECOMMENDING A PARTNERSHIP OR OTHER ENTITY, INVESTMENT PLAN OR ARRANGEMENT TO ANY PERSON.