ARLINGTON, Va. – NAFCU is seeking input from its members on anew section of the Internal Revenue Code that provides guidance onnonqualified deferred compensation plans. Treasury and IRS issuedclarifications last Wednesday on guidance on distributions andother features of nonqualified deferred compensation plansaddressed under section 409(A) of the Internal Revenue Code. Theclarifications are that changes in a plan having to do with paymentelections affecting previously deferred income will not be treatedas an acceleration of plan payments. Both agencies also clarifiedthat any plan adopted before Dec. 31, 2005 can be terminated anddeferral elections can be canceled without making the plannoncompliant with the law. On Dec. 20, 2004, both agencies issued anotice saying unless specified requirements are met, all amountsdeferred under a nonqualified deferred compensation plan for alltaxable years are currently includible in gross income, to theextent not subject to a substantial risk of forfeiture and notpreviously included in gross income. Credit unions are not likelyto be impacted by the new 409(A) section, CUNA has reported. ByJune, however, the IRS is scheduled to issue guidance on whetherFCUs are considered “federal governmental instrumentalities” andthus, able to offer 457(f) plans using a for-profit model.