Section 409(A) Deferred Compensation Regulations Still on Hold

Final regulations on deferred compensation rules under Internal Revenue Code Section 409(A) still have not been issued, leading many observers to believe the rules will allow companies until the end of 2007, rather than 2006, to amend current plans to make them compliant with the new requirements. This has particular impact for unvested discounted stock options and for stock appreciation rights, phantom stock, and restricted stock with additional deferral features. These awards would be subject to the new tax rules unless amended before the final allowed date.