This month was somewhat quieter than recent months in terms of the number of noteworthy developments. The primary exception was publication by the IRS of the long anticipated final regulations under IRC Section 409A. The Groom Law Group prepared a number of publications which you may find helpful in summarizing the regulations (the final package was approximately 400 pages long).
On a related note, the IRS recently issued Notice 2007-34 providing guidance regarding the application of 409A to split-dollar life insurance arrangements. The notice covers which arrangements will be covered under 409A, which will not (e.g. plans providing only death benefits) and provides guidance regarding amending pre-409A plans without endangering grandfathered status.
Last year, the SEC adopted changes to the rules requiring disclosure of executive and director compensation. Among items that remain unclear as the first cycle of proxies subject to the new rules approaches, is the disclosure of “above market earnings” under deferred compensation plans. The AALU prepared a Bulletin (No. 07-40) which addresses this issue and provides some insight regarding feedback some public companies have received from the SEC on this topic.
The IRS recently released IRS Revenue Ruling 2007-38. This is an important and positive development surrounding an employer’s ability to exchange (i.e. via IRC Section 1035) a portion of its MEC contracts originally purchased from one insurance company during a given calendar year to an unrelated insurance company.
This Revenue Ruling, coupled with PLR 200711014 published earlier this year, provides importance guidance regarding an employer’s ability to selectively tranche policies into sub-groups for the purpose of pursuing improvements under IRC Section 1035.