3599 / Will the IRS issue advance rulings on the tax consequences of Section 457(b) “eligible” and Section 457(f) “ineligible” nonqualified deferred compensation plans?
It was clear though, prior to the enactment of Section 409A, that the IRS would not issue an advance ruling on the tax consequences of a Section 457(b) plan covering independent contractors, unless all such independent contractors were identified.1 Now that 457(b) “eligible” plans are specifically exempted from, and 457(f) “ineligible” plans are specifically covered by, Section 409A statutorily, perhaps the IRS will begin to provide letter rulings on 457(b) “eligible” plans. However, the IRS has indicated its direction will be to issue fewer letter rulings on qualified plans, so it is currently not likely that 457(b) plan can obtain a letter ruling either. As noted, the IRS specifically will not issue letter rulings on the income tax consequences of plans that are covered by Section 409A, which would include 457(f) “ineligible” plans (see Q 3541).
1. Rev. Proc. 2003-3, § 3.01(36), 2003-1 CB 113, as modified by Rev. Proc. 2011-56.
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