August 2007


IRS Releases 409A Corrections

The Treasury and IRS published corrections to the final regulations that were published in April 2007 relating to IRC § 409A. The corrections were released and became effective July 31, 2007.

The Treasury and IRS also published notice of proposed rulemaking regarding regulations under IRC § 402(a). The rules as proposed would affect the tax treatment of medical and accident insurance purchased within qualified retirement plans. Premiums paid within the plan would be considered a taxable distribution from the plan (to the participant). Davis & Harman, on behalf of the American Benefits Counsel, authored a summary of the proposed regulations. We are working with The Groom Law Group to submit comments and plan to attend the public hearings to seek limited exemptions to the proposed rules for disability coverage to the extent it protects annual plan contributions.