The IRS has issued transition relief and guidance for correcting operational failures under nonqualified deferred compensation plans. Following the methods outlined in the guidance will avoid income inclusion under § 409A(a).
The second section of the guidance explains how to obtain relief for unintentional operational failures corrected in the same taxable year as the failure occurs. Relief is not available for intentional failures or in the case of the exercise of a stock right that would otherwise result in a failure to comply with § 409A. The guidance is contained in Notice 2007-100.