Common 409A Problems After the Transition Period

Code Section 409A, passed by American Jobs Creation Act of 2004, consisted of only about 2,700 words. The 409A regulations, finalized in April, 2007, were approximately 110,000 words long.  And now that the reasonable, good faith transition period is over beginning January 1, 2009, every one of those words is fully in effect. Given the onerous penalties involved in any 409A compliance failure, most employers are working hard to avoid errors. However, some of the more complex rules of the 409A regulations are continuing to create plan design and drafting issues for employers. The attached article will discuss a selected few of those issues so that employers can be aware of them to avoid them in the future and take necessary corrective steps with existing plans.

This article will appear in the Fall 2009 Issue of the Journal of Pension Planning and Compliance.