Notice 2009-92

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					Part III. Administrative, Procedural, and Miscellaneous
Guidance on the Application                     in income immediately compensation              may be delayed to a date after a designated
of § 409A(a) to Changes                         otherwise deferred under the plan and           payment date under certain circumstances,
to Nonqualified Deferred                        pay taxes on such income, including an          and that in these circumstances the appli-
                                                additional 20% tax and a tax generally          cable plan provision will not fail to meet
Compensation Plans to                           based upon the underpayment interest            the requirements of establishing a permis-
Comply with an Advisory                         that would have accrued had the amount          sible payment event and the delay in the
Opinion of the Office of the                    been includible in income when first de-        payment will not constitute a subsequent
Special Master for TARP                         ferred or, if later, vested. As provided        deferral election, as long as the service re-
Executive Compensation                          by § 409A(a)(1)(A)(i), a nonqualified de-       cipient treats all payments to similarly sit-
                                                ferred compensation plan must comply            uated service providers on a reasonably
Notice 2009–92                                  with the requirements of § 409A(a) both         consistent basis. Such circumstances in-
                                                in form and in operation. Section 409A(e)       clude (i) the delay of payments subject to
I. Introduction                                 provides that the Secretary of the Treasury     § 162(m) to the extent the service recip-
                                                (Secretary) shall prescribe such regula-        ient reasonably anticipates that if the pay-
   This notice provides that, subject to cer-   tions as may be necessary or appropriate        ments were made as scheduled, the service
tain conditions, the compliance by a fi-        to carry out the purposes of § 409A. On         recipient’s deduction with respect to such
nancial institution (TARP recipient) that       April 17, 2007, the Treasury Department         payments would not be permitted due to
has received financial assistance under the     and the IRS issued final regulations under      the application of § 162(m), (ii) the de-
Troubled Asset Relief Program (TARP)            § 409A that apply to taxable years begin-       lay of payments to the extent the service
with an advisory opinion of the Office          ning on or after January 1, 2009 (72 Fed.       recipient reasonably anticipates that mak-
of the Special Master for TARP Execu-           Reg. 19234).                                    ing the payments will violate Federal se-
tive Compensation (the Special Master)              Section 409A(a)(4) provides certain         curities laws or other applicable law, and
determining that changing the time or form      rules with respect to making an election        (iii) such other events and conditions as the
of payment of compensation to a service         to defer compensation under a nonquali-         Commissioner may prescribe in generally
provider of the TARP recipient, or condi-       fied deferred compensation plan. Section        applicable guidance published in the Inter-
tioning payment upon a TARP-related con-        409A(a)(4)(B)(i) provides generally that        nal Revenue Bulletin.
dition such as the prior repayment of some      a plan may permit compensation for ser-             Section 409A(a)(3) provides that, ex-
or all of the financial assistance, or both,    vices performed during a taxable year to        cept as provided in regulations issued
is necessary for the payment or arrange-        be deferred at the participant’s election       by the Secretary, a nonqualified deferred
ment to be consistent with the standards set    only if the election to defer such com-         compensation plan may not permit the
forth in Treasury’s Interim Final Rule for      pensation is made not later than the close      acceleration of the time or schedule of pay-
TARP Compensation and Corporate Gov-            of the preceding taxable year or at such        ment of compensation deferred under the
ernance (74 FR 28394), will not result in       other time as is provided in regulations.       plan. Section 1.409A–3(j) further provides
a failure to comply with the requirements       Section 409A(a)(4)(C) provides that a           that a nonqualified deferred compensa-
of § 409A(a) of the Internal Revenue Code       nonqualified deferred compensation plan         tion plan may not permit the acceleration
(Code). This notice applies only to TARP        that permits, under a subsequent election       of the time or schedule of any payment,
recipients and the service providers of such    (a subsequent deferral election), a delay       and no such accelerated payment may be
TARP recipients and only to the extent that     in a payment or a change in the form of         made whether or not provided for under
the compensation paid by the TARP recip-        payment must require that (i) such elec-        the terms of the plan, except pursuant to
ient to a service provider of that TARP re-     tion will not take effect until at least 12     one of the exceptions set forth under such
cipient is addressed by an advisory opinion     months after the date on which the elec-        section.
of the Special Master issued after Septem-      tion is made, (ii) in the case of an election       Under § 1.409A–1(b)(4), an amount
ber 30, 2009. The Treasury Department           related to a payment not made on account        that constitutes a short-term deferral is not
and the IRS intend to amend the regula-         of disability, death or the occurrence of       a deferral of compensation for purposes
tions under § 409A to incorporate guid-         an unforeseeable emergency, the payment         of § 409A. Generally, an amount must
ance set forth in this notice as necessary.     governed by the election will be deferred       be paid not later than the end of the ap-
                                                for a period of not less than five years from   plicable 21/2 month period (as defined in
II. Background                                  the date the payment would otherwise            § 1.409A–1(b)(4)) in order to qualify as
A. Section 409A of the Code                     have been made, and (iii) any election          a short-term deferral. The applicable 21/2
                                                related to a payment to be made at a spec-      month period is the period ending on the
   Section 409A prescribes certain re-          ified time or pursuant to a fixed schedule      15th day of the third month following the
quirements applicable to nonqualified           will be made not less than 12 months prior      later of the end of the service provider’s
deferred compensation plans. If a plan          to the date of the first scheduled payment.     first taxable year in which the right to pay-
does not meet those requirements, partic-           Section 1.409A–2(b)(7) of the Income        ment is no longer subject to a substantial
ipants in the plan are required to include      Tax Regulations provides that a payment         risk of forfeiture or the end of the service



2009–52 I.R.B.                                                     964                                         December 28, 2009
recipient’s first taxable year in which such                     authorizes the Secretary to take such                             the compensation structures of any other
right is no longer subject to such risk. Un-                     actions as the Secretary deems necessary                          executive officers of the Exceptional As-
der § 1.
				
DOCUMENT INFO
Description: Notice 2009-92 provides that a delay or acceleration of the payment of nonqualified deferred compensation in order to comply with an advisory opinion issued by the Office of the Special Master for Troubled Asset Relief Program (TARP) Executive Compensation, pursuant to the Emergency Economic Stabilization Act of 2008 and regulations thereunder, including conditioning payment on satisfaction of a requirement related to TARP, such as repayment of the financial assistance granted under TARP, will not cause the plan to fail to meet the requirements of Section 409A.
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