CCA explains when section 409A grandfathering rules may apply to a deferred compensation plan

Plain-English summary

Chief Counsel Advice addresses whether the section 409A transition rules apply to a deferred compensation plan for the open years under review. The advice says the transition rules do not apply and that the final section 409A regulations govern those years. It explains that the plan may still be grandfathered if no amounts were deferred after December 31, 2004, and the plan was not materially modified after October 3, 2004.

Ruling snapshot

• Question: Do section 409A transition or grandfathering rules apply to the deferred compensation plan for the open years under review?
• Outcome: Advice given
• Key authorities: IRC § 409A; Treas. Reg. § 1.409A-6

Full text (IRS public release)

ID: CCA-5201120-13
Office: ------------------------
UILC: 409A.00-00
Number: 201323023
Release Date: 6/7/2013
From: -----------------------
Sent: Friday, March 1, 2013 3:48 PM
To: ---------------
Cc:
Subject: Re: follow-up

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Since the open years for the plan you are reviewing are ------- and -------, the transition rules under section 409A are not applicable. The plan would be subject to the Final section 409A regulations during those years. However, there are grandfathering rules in section 1.409A-6 of the regulations that may be applicable. If no amounts were deferred under the plan in taxable years beginning after Dec. 31, 2004, and the plan was not materially modified after Oct. 3, 2004, the plan is not subject to section 409A.

Please let me know if you have any other questions.

Thanks,
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