409A valuation timing checklist
Five questions on where you are in the cycle. It will not tell you whether you are compliant — nothing on a web page can — but it will show you which of the commonly cited timing triggers your situation touches, and why each one gets raised.
This is educational, not advice. It does not determine your 409A compliance status and is not legal or tax advice. For an authoritative answer on your own facts, speak to a qualified 409A valuation provider or a tax adviser.
Educational only — this does not determine your compliance status. Nothing here is legal or tax advice, and this page cannot tell you whether your company is compliant with Section 409A or whether any consequence applies to you. It lists commonly cited timing triggers so you can raise them with a qualified 409A valuation provider or tax adviser, who is the only appropriate source for an authoritative answer on your own facts.
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Answer the questions above and this will summarise which recognised trigger points may apply to you.
What triggers a new 409A valuation requirement?
There is no fixed statutory deadline. What the regulations provide is a presumption that a valuation is reasonable, available where an independent appraisal is no more than twelve months old and nothing material has happened since. Those two conditions are what founders track.
- The twelve-month mark. The presumption of reasonableness is available where the independent appraisal is dated no more than twelve months before the grant it supports, which is why an annual refresh is the common cadence. Set out in the final regulations under §409A (72 FR 19234).
- A new financing round.A round establishes a fresh price for the company's stock, and that is new material information — which can end reliance on an earlier appraisal however recent it is. The presumption assumes no material information has arisen since the valuation date, per the same final regulations under §409A.
- A material change in the business. A pivot, a step change in revenue, or an acquisition approach are the examples usually given. The regulations also address an expected change of control or public offering as a circumstance affecting whether a valuation can still be relied on. The statute itself is IRC §409A, and the IRS's foundational guidance is Notice 2005-1.
Those descriptions summarise published guidance; they are not Lovie's legal interpretation, and the summary is not a substitute for reading the source or asking someone qualified. The three links above are the primary material.
Why the framing here is deliberately cautious
Plenty of tools will hand you a red or green light on this. We will not, because the honest answer depends on documents and facts a web page never sees, and a confident wrong answer on a tax matter is worse than no answer. What this checklist does is narrow the conversation: it tells you which trigger points to raise, so the call with a provider starts from something specific.
Staying ahead of your 409A timeline avoids compliance headaches later. Lovie helps founders track key compliance milestones like this one alongside their cap table.
Where this fits
A 409A sets the strike price for the options you grant, which makes it the input to two of our other tools: the employee equity offer calculator shows what a grant priced off it is worth to the person receiving it, and the ISO vs NSO tax calculator covers what exercising at that strike costs them. If a round is the reason you are here, the anti-dilution simulator models what that round does to the cap table itself.
Earlier in the lifecycle, the formation glossary entry on preferred stock and the entry on stock options cover the instruments a 409A is used to price, and the guide to choosing a C-Corp or LLC for fundraising explains the structure that makes option grants possible at all. Terms you do not recognise are in the cap table glossary.