Internal Revenue Service

P.O. Box 7604

Washington, D.C. 20044

Attn: CC:PA:LPD:PR (REG-158080-04)

Re:      Proposed Regulations on Nonqualified Deferred Compensation Plans Under Section 409A (REG-158080-04)

Dear Sir or Madam:

The American Institute of Certified Public Accountants (AICPA) appreciates the opportunity to comment on the proposed section 409A regulations on nonqualified deferred compensation plans. These comments were prepared by our Section 409A Proposed Regulations Working Group, and approved by our Employee Benefits Taxation Technical Resource Panel and our Tax Executive Committee. The members of the AICPA practice in both public accounting firms and in industry, and provide professional services in accounting and incomes taxes, employee benefits and compensation consulting, and plan administration. It is from this diverse perspective that we offer our comments.

The AICPA commends Treasury and the Internal Revenue Service for providing generally clear and comprehensible guidance in the proposed 409A regulations. Our comments address several aspects of the proposed regulations, including the following:

·         We request that Treasury and the IRS publish model plan amendments that may be used as a guide to bring nonqualified deferred compensation plans into compliance with section 409A. These model amendments could also be used on an ongoing basis as a guide to preparing written plan terms. We believe that the publication of model amendments would be a worthwhile effort because the model amendments would help to facilitate taxpayers’ compliance with section 409A.

·         We also request that the deadline by which plan documents must be amended to comply with the provisions of section 409A and the regulations be extended to December 31 of the calendar year following the year in which the regulations are finalized. We believe that this extension will be necessary in order to understand and interpret the final regulations, given the complex issues surrounding section 409A.

·         We request that whenever a reasonable valuation methodology is applied to determine the fair market value of stock, the valuation will be acceptable as the fair market value for section 409A purposes as long as it falls within a stated corridor (e.g., ten percent) below any value that may later be determined by the IRS as the fair market value.

·         We request an exemption from the anti-acceleration rules for payments from deferred compensation plans that are made in order to comply with independence requirements established by the Securities and Exchange Commission.

If we can be of further assistance please contact me at tpurcell@creighton.edu; G. Edgar Adkins, Jr., Chair of our Section 409A Proposed Regulations Working Group at eddie.adkins@gt.com; Sandy Wheeler, Chair of our Employee Benefit Tax Technical Resource Panel at sandra.ormsby.wheeler@us.pwc.com; or Lisa Winton, AICPA Technical Manager, at lwinton@aicpa.org.

Sincerely

Thomas J. Purcell, III

Chair, Tax Executive Committee

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