3570 / Pre-409A, if a taxpayer wanted to adopt the model trust and wished to obtain an advance ruling from the IRS on the underlying deferred compensation plan, what additional guidelines was it required to follow?

First, the plan had to provide that the trust and any assets would be held to conform to the terms of the model trust.

Second, taxpayers had to generally include a representation that the plan was not inconsistent with the terms of the trust with the letter ruling request.

Third, the language of the trust had to conform generally with the model text, and taxpayers generally had to include a representation that the trust conformed to the model trust language (including the order in which the provisions appear) and that the trust did not contain any inconsistent language (in substituted portions or elsewhere) that conflicted with the model trust language. Provisions were permitted to be renumbered if appropriate, any bracketed model trust language could be omitted, and blanks could be filled in.

Fourth, the request for a letter ruling generally had to include a copy of the trust document on which all substituted or added language was clearly marked and on which the required investment authority text was indicated.

Fifth, the request for a ruling generally had to contain a representation that the trust was a valid trust under state law, and that all of the material terms and provisions of the trust, including the creditors’ rights clause, were enforceable under the appropriate state laws.

Finally, the trustee generally had to be an independent third party that could be
granted corporate trustee powers under state law, such as a bank trust department or a similar party.¹

In summary, as of the date of this publication, a plan sponsor can neither obtain an advance ruling on the income taxation consequences for plan participants in a 409A covered unfunded nonqualified deferred compensation plan or an associated rabbi trust designed to follow the trust revenue procedure updated for 409A requirements.