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The 409A Horror Show: Don’t Let Year-End Turn Into a Tax Nightmare
Categories: Employee Benefits, Employment Compliance, ERISA, Financial Services
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As year-end approaches, it is an opportune time for companies to run an internal audit of their nonqualified deferred compensation plans to flag any potential violations of IRC Section 409A (“Section 409A”). Generally, the sooner a potential violation of Section 409A is identified, the more options a company has to correct the potential violation.

The guidance provided by the IRS regarding correcting 409A failures provides additional flexibility if errors are corrected within the year in which they occur, which means that after December 31, 2025, it could be more difficult and more costly to fix a 409A failure that occurred in 2025.

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