May 15, 2015
409A Correction: IRS Chief Counsel Memorandum clarifies that correction of Section 409A failures …
409 Audits
409A Correction: IRS Chief Counsel Memorandum clarifies that correction of Section 409A failures in year of vesting will not shield income inclusion under 409A Following up on a topic we blogged about recently, (see blog post “409A Corrections Clarified,” from May 6) is this update from Poskauer’s ERISA Practice Center Blog, titled: IRS Chief Counsel Memorandum clarifies that correction of Section 409A failures in year of vesting will not shield income inclusion under 409A. In this blog update regarding 409A correction, Partner Joshua Miller, (Tax Department, Employee Benefits, Executive Compensation & ERISA Litigation Tax) pointed out, …more interesting, however, is that the Chief Counsel Memorandum guidance does not preclude correction of noncompliant nonqualified deferred compensation in a taxable year prior to the taxable year in which the compensation vests.” Miller’s article continues, explaining, “Under the 2008 proposed income inclusion rules, Section 409A income inclusion does not appear to be required for the year that nonqualified deferred compensation ceases to be subject to a substantial risk of forfeiture (or any later years) to the extent that the applicable plan is amended to comply with Section 409A prior to the taxable year in which the compensation vests. By not providing any indications to
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