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Treasury, IRS Propose Deferred Comp Support Group


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Today, the Treasury and the Internal Revenue Service released Notice 2008-41, authorizing the creation of a support group dedicated to helping companies avoid imposition of penalties from the inadvertent violation of Internal Revenue Code Section 409A. Dubbed 409AA, it guides companies and their advisors through a 12-step program designed to uncover areas of potential trouble. The Notice also specifies that commitments to participate must be received in writing in the year prior to commencement of the program, that shortening the number of steps is absolutely prohibited and that changes to the program will require participants to start 5 years later than originally scheduled.

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Here are the 12 - steps:

1) I will never get into conversations as to whether it is 409A or 409-Cap-A.

2) I will never pronounce Dan Hogan's name in a Colonel Klink voice.

3) I will not respond to transition relief with, "Oh no! Not again!"

4) I will not engage in debates whether nonqualified needs a hyphen.

5) I will not correct the use of "hardship", even though I know it means "occurrence due to an unforeseeable emergency".

6) I will not care whether leap year impacts the 6 month or 12 month rules.

7) I will not print out all the Notices, proposed regs, and final regs just to see the look on a client's face when they hear the sound of the stack hitting the table.

8) I will avoid conversations asking how the underpayment penalty is really calculated.

9) I will respond to every question with "What does the plan document say?" and ignore the eye rolling.

10) I will preface every response with "I don't give legal advice, but...".

11) I will not demand additional transition relief must push the compliance date out 5 years (maybe).

12) I will not ask my employer whether our company plans are 409A-compliant.

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