On Monday, the IRS released Notice 2010-80, expanding the Section 409A correction program created by Notice 2010-6. For months, I have been telling you that you had to review and revise your non-qualified plans before year-end to gain the protection of the correction program. However, the IRS reporting requirements – applicable to employees as well as employers – caused many to hesitate. Notice 2010-80 relaxes those requirements some.
More detail to follow (when I return to Chicago), but briefly, Notice 2010-80 does the following:
- Clarifies that certain linked plans are eligible for the correction program (Notice 2010-6 had excluded linked plans).
- Expands the types of plans eligible for relief under Notice 2010-6 to include certain stock rights (generally, options and SARs with an exercise price below fair market value) that were intended to comply with the requirements of 409A.
- Provides an additional method of correction for certain failures involving payments dependent upon the employee completing certain employment-related actions, such as the execution and submission of a release of claims or noncompetition agreement.
- Provides relief from the employee information reporting requirements under Notice 2010-6 for corrections made by December 31, 2010.