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IRS Proposes Changes to Section 409A Regulations

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On June 21, 2016, the IRS issued some proposed regulations which clarify or modify certain provisions of IRC Section 409A which have an impact on non-qualified deferred compensation and stock plans. Some of the proposed regulations have an effect on employee stock options (ESOs), restricted stock units (RSUs), and stock appreciation rights (SARs). Prior to this issue, the IRS had provided informal guidance on a case-by-case basis.

Although the text of the proposed regulations is lengthy, excellent commentary has been provided by a number of law and public accounting firms.

http://www.groom.com/media/publication/1712_IRS_Clarifies_Numerous_409A_Issues.pdf

https://www.ropesgray.com/newsroom/alerts/2016/June/Updates-to-the-409A-Rules.aspx

http://www.millerchevalier.com/Publications/MillerChevalierPublications?find=173903

http://www.pwc.com/us/en/tax-services/publications/insights/irs-proposes-new-rules-for-deferred-compensation-plans-.html

If you have any questions with respect to compliance with Section 409A, please contact Montgomery Investment Technology, Inc.

July 2016



About the Author:

Greg is a Derivative Valuation Consultant with Montgomery Investment Technology, Inc. He holds a BS from Carnegie-Mellon University and a PhD in Chemical Engineering with a concentration in Applied Mathematics from Princeton University. His experience spans management at both public and privately held companies, as well as teaching finance at the university level. Greg is a Chartered Alternative Investment Analyst (CAIA) and a Financial Risk Manager (FRM)