Extract to table

Elections to defer compensation must generally be made no later than the close of the taxable year preceding the year in which the services giving rise to the compensation are performed

Specifically, Section 409A(a)(1) provides that if at any time during a taxable year a nonqualified deferred compensation plan fails to meet the requirements of Section 409A(a), or is not operated in accordance with such requirements, all compensation deferred under the plan for the taxable year and all preceding taxable years shall be includible in gross income to the extent not subject to a substantial risk of forfeiture and not previously included in gross income

The option must be granted with an exercise price that may never be less than the fair market value of the underlying stock on the date of grant

Notably, the exercise price must never be less than FMV, meaning that an exercise price set above FMV (a "premium" option) satisfies this requirement

The option must cover "service recipient stock" within the meaning of Treasury Regulation § 1

The option must not include any feature for the deferral of compensation beyond the date of exercise and receipt of the underlying shares (or cash equivalent)