The IRS has begun a formal compliance initiative project related to deferred compensation plans' compliance with the requirements of Code section 409A.  The IRS has indicated that the initial phase of the project will be limited to focus on the 10 most highly compensated employees at 50 companies that were previously identified for an audit based on the companies' previous issues with other employment tax issues.  The IRS has informally indicated that audits will focus on compliance issues related to initial deferral elections, subsequent deferral elections and distributions.  The IRS will likely expand this project in the future beyond this initial group of taxpayers.