Alerts

Deadline for Complying with the Final Section 409A Regulations Governing Deferred Compensation Arrangements is Dec. 31, 2008

August 28, 2008

Section 409A of the Internal Code of 1986, as amended (“Section 409A”), impacts many common forms of compensation deferred by certain cash-basis taxpayers after 2004 or, in certain circumstances, earlier. Affected compensation includes, but is not limited to, fees deferred by cash-basis investment managers of offshore hedge funds and the plans governing payment of those amounts to the investment managers’ partners and employees. Failure to adhere to the technical rules of Section 409A can result in immediate taxation of such compensation, an additional 20% penalty tax on such amounts and increased interest on the resulting tax underpayment.