It’s fairly easy to make mistakes with complex deferred compensation plans that dish out compensation to employees at a future date. Those mistakes can trigger costly penalties.
Good news: The IRS last month published new guidance to help employers comply with the rules, covered under Section 409A of the tax code. It gives employers limited opportunity to fix those errors without penalties.
Find the guidance at www.irs.gov/irb/2010-01_IRB/ar11.html.