Sick and Vacation Pay Deferrals under Proposed Regulations

[Guest kjungkin]

1.457-4(d) of the Proposed Regs provides that sick and vacation pay may be deferred under an eligible plan only if "an agreement providing for the deferral is entered into before the beginning of the month in which the amounts would otherwise be paid or made available and the participant is an employee in that month." Has anyone come across any guidance on what this language means with respect to the requirement that the participant be an employee in "that" month? Is the applicable month the month of deferral or the month that the amounts would otherwise be paid or made available? The fact situation involves a terminating employee who elects a deferral before the beginning of the month in which the amounts would be payable, but has terminated by the time the amounts are payable. For instance, the employee's termination date is 12/31 but the benefits are not paid until 1/15 due to payroll requirements. If the employee elects to defer in December, and is employed in that month, are the amounts deferrable?