Excerpt: Final regulations implementing the requirements of Section 409A take effect on January 1, 2009. As a result, Section 409A nonqualified deferred compensation plans must be brought into full operational and written compliance with those requirements by January 1, 2009. As the January 1 effective date draws nearer, increasing attention is being focused on how to determine the tax impact of Section 409A failures. The proposed regulations provide some initial insight into how to determine this tax impact, although they are likely to be revised in certain respects. However, under IRS Notice 2008-115 (issued separately on December 10, 2008), the proposed regulations can be relied upon with respect to the calculation of income includible under Section 409A and the calculation of the additional taxes until the issuance of final regulations.

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