The new deferred compensation provisions under the Jobs Creation Act (Sec. 409A) except bonus or other deferred compensation that is paid out within 2 1/2 months into the year following the year the compensation was earned.

Does that mean that a perfomance bonus earned in 2005 that is completely paid out to the participant by March 15, 2006 is not subject to the requirement that the deferral election be in place on or before June 30, 2005??

The statute seems to say so. If it's paid within two and 1/2 months, it's not deferred compensation (and therefore not subjec to 409A rules). On the other hand, if it's paid after two and 1/2 months, it isn't automatically deferred compensation, based on the facts and circumstances of the payment (e.g. is it subject to a substantial risk of forfeiture - if so, 409A does not apply according to its terms). Good news is that regs will be out very, very soon, and perhaps we'll find more clear guidance then.

I'm curious what you mean by "the deferral election" must be in place. What deferral election??? Do employees have the choice to get paid on March 15th or some later date?