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W-2 Reporting of Deferral of Compensation is Delayed

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January 19, 2009

On December 29, 2008, the IRS published Notice 2008-115, "Reporting and Wage Withholding Under Internal Revenue Code § 409A." This Notice provides interim guidance to employers and tax payers on their reporting requirements with respect to all deferrals of compensation made pursuant to a nonqualified deferred compensation plan subject to Section 409A.

The Notice extends the relief provided by Notice 2006-100 and Notice 2007-89, which were applicable to calendar years 2006 and 2007. Consequently, employers and tax payers are not required to report in Form W-2 (using code Y in box 12) the amounts of compensation deferred under nonqualified deferred compensation plans during 2008. However, amounts actually includible in gross income under Section 409A must be reported using code Z in box 12 of Form W-2. The Notice also provides additional guidance on how to calculate such amounts.

This interim guidance is effective for calendar year 2008 reporting, and will remain in effect for subsequent calendar years until the Treasury Department and the IRS issue further guidance.

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