Key takeaways 

• Employers have until December 31, 2012 to act to ensure that deferred compensation and severance arrangements that can allow an employee to control the year of payment by determining when to deliver a required release comply with earlier Section 409A guidance.
• A plan that provides that severance or other compensation may be paid or commence to be paid in a period that begins in one year and ends in another year can be corrected under this guidance if it was in existence as of December 31, 2010, and the severance or other compensation has not become payable by December 31, 2012.
• Under this correction relief, a plan that provides for a defined payment period must be revised to provide that the severance is paid or commences to be paid either on the last day of the period or in the second year. A plan that does not provide for a defined payment period must be revised to provide that the severance is paid or commences to be paid either on the 60th or 90th day following separation from service or during a specified period not longer than 90 days, with the condition that the payment will be paid or commence to be paid in the second year.