Deferred Compensation Plans – 457(b) and 457(f)

The Internal Revenue Service (IRS) issued proposed regulationsintended to provide guidance with respect to the application of Internal Revenue Code (IRC) Section 457 to nonqualified deferred compensation arrangements. The proposed regulations and explanations issued by the IRS represent the first issuance of substantial guidance since final 457 regulations were issued in 2003. 

Specific matters addressed in the regulations include: rules for determining when amounts deferred under these plans are included in income; the amounts that are includable in income; and the types of plans sponsored by State or local governments or tax-exempt organizations that provide for a deferral of compensation.