Excerpt: The Treasury Department and IRS released Notice 2008-62 in advance of the forthcoming Code §457(f) proposed regulations to provide relief to schools as they begin their 2008/2009 school year. The use of a 12-month pay period that spans two calendar years for employees that actually only work for 9 or 10 months results in compensation earned in one year being deferred to a second year. The notice establishes criteria which, if met, excludes arrangements in which school employees are compensated on a 12-month pay period in lieu of the 9 or 10-month actual work period from being considered as deferred compensation and, therefore, not subject to the rules under Code §§457(f) and 409A.

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