Executive Compensation-IRS Modifies The Relief And Guidance It Previously Provided On The Correction Of Certain Failures Of A Nonqualified Deferred Compensation Plan to Meet Section 409A

The IRS has issued Notice 2010-80. This notice modifies certain provisions of Notice 2008-113 and Notice 2010-6, dealing with the correction of failures to comply with Section 409A of the Internal Revenue Code (the “Code”), by:

• Clarifying that the types of plans eligible for relief under Notice 2010-6 include a nonqualified plan linked to a qualified plan or another nonqualified plan, provided that the linkage does not affect the time and form of payments under the plans;

• Expanding the types of plans eligible for relief under Notice 2010-6 to include certain stock rights that were intended to comply with the requirements of Code Section 409A(a) (rather than be exempt from the requirements of Section 409A(a));

• Providing an additional method of correction under Notice 2010-6 for certain failures involving payments at separation from service subject to the requirement to submit a release of claims or similar document; and providing transition relief permitting the correction of such failures that were in effect on or before December 31, 2010 (including relief from the service provider information reporting requirements);

• Providing relief from the service provider information reporting requirements under Notice 2010-6 for corrections made under the transition relief ending December 31, 2010; and
• Providing relief from the requirement that service recipients furnish certain information to service providers under Notice 2008-113 for corrections made in the same taxable year as the failure occurs.