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Posted

OK, anyone have some straight skinny, or decent speculation, on what's going on with Treasury guidance and the 409A effective dates?

I saw an industry org. at-issue memo asking Treasury to postpone certain 409A effective dates due to the lack of guidance. Personally, I was expected to see more from Treasury before summer and I don't like having projects on perma-hold.

The reality is some NQDC sponsors are going to be headed for enrollment meetings in Sept - Oct with issues undecided, designs unfinished and questions unanswered.

Ggrrr.

Posted

I guess you were not around when ERISA was enacted. I dont see how the IRS can postpone the effective dates for 409A because they are statuory- they will just delay the dates plans will have to be amended for 409A.

mjb

Posted

I've heard that there is lot of pressure to extend the transition period. So that we at least know what plans and features are affected by the rules before anything has to be set in stone. E.g., the transition period during which participant distribution elections etc. can be finalized could be extended.

Posted

We think they will extend the amendment date. The effective date is statutory and all Treasury can do is delay enforcement and amendment dates.

  • 1 month later...
Posted

So, we're past 9/15/05 and BNA reportedly quotes an IRS Chief Counsel as saying toward end of year for guidance, and the speculation is growing there will be delayed effective dates, (agreed it may mean extended good faith compliance and delaying amendment dates). Katrina is the culprit, I guess the IRS saw it coming back in May.

Thanks Mark for the post.

Posted

The regs may be delayed until 2006 because of Katrina tax relief legislation which will permit withdrawlas from pension plans w/out penalties and provide other tax benefits and will be enacted within the next 30 days. IRS will give priority to issuing guidance on this legislation.

mjb

Posted

I have heard from very reliable sources that the regulations will be out very soon and that we can expect an extension on the amendment deadline. You should continue to operate in good faith until the regs are issued. I was also informed that the December 31, 2005 termination deadline will not be extended.

Posted

Yeah, I heard it's 250 pages and could be issued almost immediately. It sounds like it's a coin-toss whether it gets issued or postponed as Treasury enters stand-by mode to support the enactment whims of Congress.

Posted

Here is what RIA reported yesterday: Section 199 and 409A guidance projects under the American Jobs Creation Act delayed by shift of effort to Hurricane Katrina relief: Two high-priority guidance projects are facing delays to allow the Treasury Dept. and IRS to concentrate on Hurricane Katrina relief efforts, an IRS spokesperson told RIA on Sept. 19. Guidance will be delayed by a few weeks, possibly a month on the Code Sec. 199 manufacturing deduction and Code Sec. 409A deferred compensation plans. The Treasury Department is focusing its immediate attention on Hurricane Katrina-related tax legislation.

Posted

I also just heard that they are supposed to be out next week. If that is true, that reflects a massive reordering of the priorities at Treasury, attributable, no doubt, to the outcries from the employer community about the effect of delaying the issuance of the regulations.

Kirk Maldonado

Posted

Kirk: Why do you think that this is a significant change? They have been indicating that the second set was fairly complete from a drafting standpoint since at least July or earlier. They have just been waiting for approvals. Is it possibly the third set that you heard was to be released much later?

Posted

Why is there a compulsive need to know when the regs will be issued? When they are issued everyone will able to review them and advise clients to amend their plans as of whatever date the IRS requires. You can check www.irs.gov to see if the regs have been issued.

I didnt come up with any documents under "409A regulations"

mjb

Posted

Generally, I have the impression that Er decisions, executive communication and document work has been postponed until the next round of meaningful guidance.

Posted

E as in ERISA:

I had a conversation very recently with a very reliable source that indicated that the Katrina-related projects were consuming so much time that there was no way that the guidance would come out in the near future. This source indicated that there was some frustration with Congress treating them like they had no other work to do other than to devote all of their time to Katrina-related projects.

A cynic might speculate that the people in the administration were tired of Congress taking up all of their time on Katrina-related projects. Accordingly, they told the press that the 409A guidance and other projects were going to get delayed, knowing that the employer community would demand that they recommence work on the 409A project. The predictable outrage from the business community (about the delay) would enable those individuals to be able to tell Congress "I'd love to help you on your Katrina-related projects, but the business community demands that we much get the 409A guidance out."

This is pure unsubstantiated speculation on my behalf, but my theory does explain the recent turn of events.

Kirk Maldonado

Posted

Isnt this postering all part of the Kabuki theatre that is always playing inside the beltway. The administration officials are telling the employer groups what they want to hear about the importance of the 409A regs when they need Congress to approve Katrina legislation to improve the administraton's approval rating. And after Katrina there will be Rita legislation. The IRS officials know that its not the employer groups who will approve their appropriations for the Fiscal yr that begins Oct. 1.

mjb

Posted

"September 29, 2005

JS-2956

Treasury and IRS Propose Regulations

on Deferred Compensation

WASHINGTON, DC -- The Treasury Department and IRS today issued proposed regulations on deferred compensation under section 409A. Section 409A governs plans and arrangements that provide nonqualified deferred compensation to employees, directors or other service providers. These regulations implement new provisions established by the American Jobs Creation Act (AJCA).

The proposed regulations announced today identify which plans and arrangements are covered under section 409A, outline operational requirements for deferral elections and permissible timing for deferred compensation payments made under the rules.

The rules also extend the deadline for documentary compliance with the new rules to December 31, 2006. The deadline was initially December 31, 2005.

The proposed regulations provide a framework for implementing the requirements of section 409A, taking into account the numerous comments received from the public on Notice 2005-1, issued last December.

The effective date proposed for the regulations is January 1, 2007. Taxpayers may rely on the proposed regulations until final regulations are effective.

REPORTS

A copy of the proposed regulations [or

http://www.treas.gov/press/releases/reports/reg15808004.pdf ]

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