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ARTICLE · 05 JANUARY 2011

IRS Issues Guidance on Unforeseeable Emergency Distributions from 409A and 457(b) Plans

McGuireWoods LLP
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IRS has released Revenue Ruling 2010-27, which contains examples of expenses that may be eligible for an unforeseeable emergency distribution from deferred compensation plans that are subject to Section 409A or Section 457(b) of the Internal Revenue Code.

United StatesEmployment and HR
Robert Chambers
Robert Chambers
Larry Goodall
Larry Goodall

IRS has released Revenue Ruling 2010-27, which contains examples of expenses that may be eligible for an unforeseeable emergency distribution from deferred compensation plans that are subject to Section 409A or Section 457(b) of the Internal Revenue Code.

And, no, Virginia, the ruling does not permit distributions to pay off holiday credit card bills.

For many years, employers and plan administrators have been able to rely on comprehensive regulations, including "safe harbors," for hardship withdrawals from 401(k) plans. However, the IRS guidance on distributions from other types of deferred compensation plans that are due to unforeseeable emergencies has been more limited.

Revenue Ruling 2010-27 contains examples of expenses that may be eligible for an unforeseeable emergency distribution from deferred compensation plans that are subject to Section 409A or 457(b) of the Internal Revenue Code (the Code). Code Section 409A covers many types of nonqualified

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