IRS grants 409A and 457 relief for teachers and others with recurring part-year pay

Teachers do not have deferred compensation merely because they work during the school year but are paid over 12 or 13 months, provided no more than $15,500 (indexed) is shifted from one tax year to the next. Notice 2008-62 also applies to other service providers with recurring part-year compensation, with its new rules to be reflected in regulations under Sections 409A and 457. While good news for most, the relief highlights a potential trap for high-earners whose pay shifts by more than $15,500. Taxpayers may rely on the notice starting with the first tax year that includes July 1, 2008.  (Select News, 2 Jul 2008)

• Full text of Notice 2008-62 (IRS, 30 Jun 2008) (PDF)

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