TaxNewsFlash-Exempt Organizations

July 1, 2008
No. 2008-61

PRINTABLE VERSION

Interim Guidance Under Section 457 for Recurring Part-Year Compensation

The IRS today released an advance copy of Notice 2008-62 providing interim guidance that the IRS and Treasury Department anticipate will be included in proposed regulations under section 457(f).

According to today’s notice, the future proposed regulations would:

Address certain types of arrangements involving recurring part-year compensation—including common arrangements involving public school employees who provide services during a 10-month school year and elect to be paid ratably over 12 months

Provide that if certain conditions are satisfied, section 457(f) would not apply to such arrangements.

Conforming changes also would be proposed for regulations under section 409A, so that section 409A also will not apply to such arrangements if certain conditions are met.

For an electronic version of today’s notice: Notice 2008-62

With today’s release, the IRS stated that until further guidance is issued, taxpayers may rely on the rule described in section II of Notice 2008-62 for purposes of both sections 457(f) and 409A beginning with the first tax year that includes July 1, 2008.

Notice 2008-62 will appear in Internal Revenue Bulletin 2008-29 dated July 21, 2008.

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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