Client Alert
Final Code Section 409A Regulations May Trigger Need To Amend Equity Plans Before Year-End
June 14, 2007
As a result of recently-issued IRS and Treasury Department tax guidance, public and private employers that are not already doing so should begin reviewing their equity-based plans now to determine whether changes to plan terms or plan operation will be necessary to avoid potentially serious tax consequences. The guidance, in the form of final regulations issued under Section 409A of the Internal Revenue Code of 1986, impacts any plan or arrangement that is deemed to involve "deferred compensation," including many types of equity plans and arrangements. Employers must amend any affected plans or arrangements by December 31, 2007 in order to avoid the negative tax consequences that may result in the event of noncompliance with Section 409A. Our client alert highlights key provisions of the Section 409A final regulations that affect equity plans and identifies actions companies should be considering.
Click here to access our client alert describing the final regulations.
If you have any questions regarding the effect of the final regulations on your equity plans, please contact either the Womble Carlyle attorney with whom you regularly work or one of our Corporate and Securities attorneys or one of our Employee Benefits attorneys.
Womble Carlyle client alerts are intended to provide general information about significant legal developments and should not be construed as legal advice on any specific facts and circumstances, nor should they be construed as advertisements for legal services.
IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice within this client alert is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in a client alert.
