SECTION 1. PURPOSE

This notice provides transition relief under section 409A of the Internal Revenue Code (Code), applicable to nonqualified deferred compensation plans. The IRS and Treasury Department are currently in the process of finalizing the proposed regulations under section 409A that were published October 4, 2005. The proposed regulations contained a proposed effective date of January 1, 2007 for the final regulations. Although the IRS and Treasury Department expect to issue the final regulations before the end of 2006, commentators have expressed concern that there will not be sufficient time between the issuance of the final regulations and the proposed effective date for taxpayers to analyze the final regulations and come into compliance with them. Commentators have also raised questions and concerns about certain other aspects of the transition relief.

Accordingly, as described in more detail below, this notice provides further transition relief by:

will not become effective until January 1, 2008

transition relief provided for 2006 in the preamble to the proposed regulations except with respect to certain discounted stock rights

for certain payment elections in linked plans and certain collective bargaining arrangements

tain plans that took advantage of transition relief provided for 2005