Guidelines offered on deferred comp rules.

• Author: Marshall, Jeffrey
• Position: COMPENSATION

Recently, the IRS issued final regulations to provide guidance on rules for nonqualified deferred compensation plans under Internal Revenue Code Sec. 409A--rules that went into effect on Jan. 1, 2005. Grant Thornton LLP suggests seven steps that companies should take to comply with the rules:

1: Identify arrangements that provide for a deferral of compensation.

2: For each arrangement, decide between removing the deferral of compensation and complying with the rules.

3: Design each arrangement to comply with the rules.

4: Develop and implement policies and administrative procedures.

5: Prepare a written plan by Dec. 31, 2007.

6: Obtain service provider elections as to time/form of payment by Dec. 31, 2007.

7: Evaluate compliance for the period between Jan. 1, 2005 and Jan. 1, 2008.

If companies don't take steps to comply, employees face immediate taxation, plus a 20 percent penalty and interest, says Edgar...