457(f)/409A loss of account balance

[Ken Davis]

Under the 409A regs, if an employee must include deferred comp in income because 409A rules are not met, and later the account balance is permanently lost (employer becomes bankrupt, for example), an income tax deduction equal to the lost deferred comp is allowed. The regs. don't say whether it's an above the line deduction or misc. itemized deduction. Any insight on which it is would be appreciated.

Second question. Suppose the 409A rules are met, but the deferred comp must be included in income under 457(f). Does the employee get a deduction under 457(f) if the deferred comp is later permanently lost?

Thanks,

Ken Davis