The Internal Revenue Service (IRS) recently issued proposed Treasury Regulations (available here) that would clarify certain provisions of the final regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The proposed regulations also would expand the anti-abuse provisions of proposed rulemaking issued in December 2008 with respect to income inclusion under Code Section 409A (available here). The IRS simultaneously released new proposed Treasury Regulations under Code Section 457, which you can read about in our Client Alert available here.
The proposed regulations under Section 409A are subject to a 90-day comment period ending September 20, 2016, and would become applicable on or after the date of publication in the Federal Register as final rules. While not effective until adopted in final form, proposed regulations may be relied on immediately.
The proposed regulations touch upon a variety of distinct issues under Section 409A. In general, the guidance from the proposed regulations is consistent with how we have interpreted and analyzed the underlying Section 409A requirements. We will be posting a series of blog entries on the proposed rules over the upcoming weeks, with specific analysis and explanations of their individual components.