IRS May Soon Solve School Teacher 409A Problem

IRS expects that upcoming guidance will solve problem of recurring part-year compensation for school teachers.

"The regulations to be proposed are expected to address certain types of arrangements involving recurring part-year compensation, including common arrangements involving public school employees who provide services during a 10 month school year and elect to be paid ratably over 12 months. It is expected that the regulations would provide that if certain conditions described below are satisfied, §457(f) would not apply to such arrangements. It is also expected that a conforming change will be proposed for regulations under § 409A, so that § 409A also will not apply to such arrangements if such conditions are met."


NOTE FROM TEACHERS UNION