IRS Publishes Interim Guidance on § 457A

January 8, 2009 (PLANSPONSOR.com) - In Notice 2009-8, the Internal Revenue Service has published guidance on the application of § 457A to nonqualified deferred compensation plans of nonqualified entities.

The IRS notes that Section 457A applies to amounts deferred that are attributable to services performed after December 31, 2008.   

Additionally, the notice explains that, in the case of any amount deferred to which § 457A would not otherwise apply solely by reason of the fact that the amount is attributable to services performed before January 1, 2009, to the extent the amount deferred is not included in gross income in a taxable year beginning before 2018, that amount deferred is includible in gross income in the later of (a) the last taxable year beginning before January 1, 2018 or (b) the first taxable year in which there is no substantial risk of forfeiture of the right to the amount deferred.

The IRS notes that, until further guidance is issued, taxpayers may rely on the rules in this notice for purposes of § 457A effective from October 3, 2008 (the date of enactment of TEAMTRA).   The  Notice also clarifies that further guidance that would expand the coverage of § 457A will be prospective and will not apply to a service provider's taxable years beginning before the issuance of such guidance.