This article by Compliance Week highlights the Internal Revenue Service (IRS) program to let companies fix errors in their deferred-compensation plans so that those plans can be brought into compliance with Section 409A of the tax code.

Revisions to Section 409A went into effect at the end of 2008, and companies have been enduring headaches with the cumbersome new rules ever since. Tax penalties for non-compliance are severe, for both companies issuing the deferred-compensation plans and the employees who receive them.

The guidance provides companies a chance to fix most plan document errors, such as payment definition, timing, and compliance with initial deferral elections. This relief may be helpful to companies involved in mergers or acquisitions, since acquirers that inherit non-compliant compensation plans may be able to fix those errors with limited penalties.