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409a Compliance on Written Plan

Edison and Upper Saddle River, NJ – February 21, 2008 – The Internal Revenue Service recently issued Notice 2007-78 that provides plan sponsors an extension to December 31, 2008 to maintain compliance with written documentation relative to deferred compensation plans. Written language of a deferred compensation plan must be in compliance with the regulation as of the end of this year. Plans, therefore, have extra time to be modified to comply in the written form, but must continue to be in compliance operationally with Section 409A. Where written plan provisions don’t comply with the regulation, plan sponsors will not violate 409A if:

• The plan operates in compliance with 409A;

• Is amended on or before the December 31, 2008 deadline; and

• Complies with 409A retroactive to January 1, 2007.

What does this mean? Although the IRS has extended the deadline for compliance relative to written plan documentation, the plan itself must already operate under the 409A regulations. Therefore, there is no relief in the manner in which deferrals are made. Some of the key deferral aspects that 409A stipulates and for which compliance should already be in effect are as follows:

• Timing of deferrals. Deferral elections must be made before December 31 for compensation that will be deferred during the following calendar year. For example, compensation that will be deferred during 2008 would have required that the election be made before December 31, 2007. The exception to this election rule includes any “performance-based compensation”.

• Deferral of “performance-based compensation”. Performance-based compensation is any compensation that is contingent on satisfying pre-established performance objectives that cover a period of at least 12 consecutive months. An election to defer performance-based compensation may be made up to 6 months before the end of the period; this does not include amounts that will be paid regardless of performance, or if the amount is based on performance objectives that are certain to be met at the time they were established. Performance objectives are considered “pre-established” if they are documented, in writing, no later than 90 days from the beginning of the period. For example, assuming a short-term incentive plan runs from January 1 through December 31, 2008, with awards based on performance, a participant may elect to defer this form of compensation until June 30, 2008, so long as the objectives were established, in writing, by March 31, 2008, and that the level of performance cannot be currently ascertained.

• Changes to deferral options. A participant may change the form or timing of deferral, so long as: a) the election will not be effective until 12 months after the election is made; b) payments affected by such change are delayed for at least 5 years from the original payment date; and c) elections relative to distributions as of a specified time or on a fixed schedule are made at least 12 months before the scheduled payment date. This provision excludes payments made as a result of the participant’s death or disability.

• Delay in Payments for “Key Employees”. 409A requires that payments under a deferred compensation plan must be delayed 6 months for key employees, as defined by IRC §416(i). A key employee is one that, at any time during the plan year, is:

* an officer having an annual compensation greater than 0,000;

* a 5% owner of the company; or

* a 1% owner of the company having an annual compensation of more than 0,000.

Given that the administrative changes are already underway relative to deferrals, the following questions relative to written documentation should be evaluated and action taken by December 31, 2008 to comply with the transition relief period:

• Are there any aspects of the plan that still conflict with 409A?

• Does the plan’s language comply with the requirements under the regulation?

• Are deferral elections made on a written vehicle that complies with the regulation?

• Are elections for performance-based compensation made appropriately? Are performance objectives pre-established and is the level of performance against these objectives substantially unknown at the time that deferrals can be elected?

• Are changes to deferral options properly documented within the plan?

• Does the plan document reflect the following:

* Is in the form of a written document;

* States a specific formula to calculate deferred compensation;

* Indicates the payment schedule or triggering events;

* Specifies a six-month payout delay for “key employees”;

* Provides specific language regarding acceleration of distributions; and

* Includes a clause regarding substantial risk of forfeiture on deferred amounts?

Compliance with 409A is a key aspect of successful administration of deferred compensation plans, and obviously, avoidance of scrutiny and penalties. A thorough examination of administration of your deferred compensation plans and implementation of changes to maintain compliance of written documentation is essential before the December 31, 2008 deadline. Outside professional advice can provide an objective look at your deferred compensation arrangements, and provide the necessary guidance to move towards full compliance with 409A.

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The written advice was not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.

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Pre Written Speeches Which you Can Turn to in your Hour of Need

So, you’ve been asked to speak at a wedding. Already you can feel your knees shaking and your throat closing up so tightly that you can barely get a squeak out. This is a normal state of affairs for most people when they learn they have to give a speech of any kind, not only a wedding speech. The good thing about giving a wedding speech however, is the fact that you have at hand, pre written speeches which you can turn to in your hour of need.

These speeches are for the most part, works of art and depending on where you get them from, might even cost you an arm and a leg. But then again, what’s an arm and a leg if you can get up in front of a crowd of people secure in the knowledge that you have a doozy of a wedding speech to give.

This in fact, is the reason why so many people resort to using pre written speeches. For one thing, these have been written by professionals so you know that every penny you spend on them is good, and for another thing if you’re not one of the most literary minded people in the world then you don’t have the hassle of having to write out your speech – all you need to do is to use one of the many pre written speeches.

The one thing you need to be careful about when using pre written speeches however, is that your speech doesn’t end up sounding impersonal. This can very easily happen since none of these pre written speeches were written with you in mind. They are of a necessity a generic formula transformed into something that sounds wonderful, but which is also very impersonal.

So even if you use pre written speeches you might find that you still have to have change things around slightly to make the speech sound more like you, and definitely more personal. Just because you use pre written speeches it doesn’t mean that you have to stick with the formula exactly.

You can change things around slightly to better suit your own personal style of speaking. A tweak here and a small change to reflect your normal speech patterns will make all the difference to your speech, and no one will even know that you are using a pre written speech.

Just remember to substitute the real names of the bridal couple for the names given in the pre written speeches! You really wouldn’t want to say John and Lindsey, when you meant to say John and Danielle!