[Federal Register Volume 73, Number 186 (Wednesday, September 24, 2008)]
[Rules and Regulations]
[Page 54945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22383]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9321]
RIN 1545-BE79


Application of Section 409A to Nonqualified Deferred Compensation 
Plans; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

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SUMMARY: This document contains corrections to final regulations (TD 
9321) which were published in the Federal Register on April 17, 2007 
(72 FR 19323). The final regulations relate to section 409A and 
nonqualified deferred compensation plans.

DATES: This correction is effective September 24, 2008, and applicable 
on April 17, 2007.

FOR FURTHER INFORMATION: Guy R. Traynor, (202) 622-3693 (not a toll-
free number).

SUPPLEMENTARY INFORMATION: 

Background

    The final regulations that are subject to this document are under 
section 409A of the Internal Revenue Code.

Need for Correction

    As published, final regulations (TD 9321) contain errors that may 
prove to be misleading and are in need of clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

0
Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendment.

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read as 
follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 2. Section 1.409A-6, paragraph (a)(3)(i) is revised to read as 
follows:


Sec.  1.409A-6  Application of section 409A and effective dates.

* * * * *
    (a) * * *
    (3) * * *
    (i) Nonaccount balance plans. The amount of compensation deferred 
before January 1, 2005, under a nonqualified deferred compensation plan 
that is a nonaccount balance plan (as defined in Sec.  1.409A-
1(c)(2)(i)(C)), equals the present value of the amount to which the 
service provider would have been entitled under the plan if the service 
provider voluntarily terminated services without cause on December 31, 
2004, and received a payment of the benefits available from the plan on 
the earliest possible date allowed under the plan to receive a payment 
of benefits following the termination of services, and received the 
benefits in the form with the maximum value.
    Notwithstanding the foregoing, for any subsequent taxable year of 
the service provider, the grandfathered amount may increase to equal 
the present value of the benefit the service provider actually becomes 
entitled to, in the form and at the time actually paid, determined 
under the terms of the plan (including applicable limits under the 
Internal Revenue Code), as in effect on October 3, 2004, without regard 
to any further services rendered by the service provider after December 
31, 2004, or any other events affecting the amount of or the 
entitlement to benefits (other than a participant election with respect 
to the time or form of an available benefit). For purposes of 
calculation the present value of a benefit under this paragraph 
(c)(3)(i), reasonable actuarial assumptions and methods must be used. 
Whether assumptions and methods are reasonable for this purpose is 
determined as of each date the benefit is valued for purposes of 
determining the grandfathered benefit, provided that any reasonable 
actuarial assumptions and methods that were used by the service 
recipient with respect to such benefit as of December 31, 2004, will 
continue to be treated as reasonable assumptions and methods for 
purposes of calculating the grandfathered benefit.
    Actuarial assumptions and methods will be presumed reasonable if 
they are the same as those used to value benefits under a qualified 
plan sponsored by the service recipient the benefits under which are 
part of the benefit formula under, or otherwise impact the amount of 
benefits under, the nonaccount balance nonqualified deferred 
compensation plan.
* * * * *

Guy R. Traynor,
Federal Register Liaison, Legal Processing Division, Associate Chief 
Counsel (Procedure and Administration).
[FR Doc. E8-22383 Filed 9-23-08; 8:45 am]
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