Internal Revenue Service Department of the Treasury Wa shington, DC 20224 Number: 201024011 Release Date: 6/18/2010 Index Number: 457.00-00 ----------------------- ------------------------ --------------------------------------- --------------------- ---------- ----------------------- ------------------------------------ Third Party Communication: None Date of Communication: Not Applicable Person To Contact: ----------------------- , ID No. ------------------- ------------------------------- -------------------- Telephone Number: --------------------- Refer Reply To: CC:TEGE:EB:QP2 PLR - 138844-09 Date: February 19, 2010 TY: Calendar Year TY: Calendar Year Legend State S = ----------------------- State Plan = ------------------------------------ Dear ----------------------- : This responds to your authorized representative's letter, on behalf of State S, requesting a ruling concerning the restated deferred compensation plan (the "State Plan") which State S intends to be an updated eligible defer red compensation plan for State S under section 457(b) of the Internal Revenue Code (the “Code”), as amended under the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). The State Plan previously received a private letter ruling on Augu st 11, 2006. The State Plan is being amended to reflect changes made to the plan with respect to certain provisions of section 457 of the Code. In addition, amendments were made to the trust requirements of section 457(g). Under the State Plan, the part icipant may elect to make deferrals into the State Plan from any accumulated sick pay or accumulated vacation pay that is payable in conjunction with the participant’s severance from employment. The participant’s election must be entered into before the first day of the month in which such amounts would otherwise be paid or made available, the amount must be paid by the later of 2 ½

PLR - 138844-09 2 months after the participants severance date, or the end of the plan year in which the participant’s severance occurred , and the amount must have otherwise been paid or usable by the participant prior to the severance if the participant had continued in the employment of State S. The trustee may, at any time, on behalf of a participant who is actively employed or during t he first twelve months following the retirement or severance from employment of any other participant who was formerly employed by State S, accept, administer, and distribute an amount that is either: (i) a direct plan-to-plan transfer of funds held under another eligible deferred compensation plan or trust described in section 457(b) of the Code for a participant that is not an eligible rollover distribution; or (ii) an eligible rollover distribution within the meaning of the State Plan from another eligib le deferred compensation plan described in section 457(b). Under the State Plan, severe financial hardships of the participant shall constitute unforeseeable emergencies (A) an illness or accident of the participant or the participants spouse or dependent s (as defined in section 152 of the Code without regard to sections 152(b)(1), (b)(2), and (d)(1)(B)); (B) loss of the participant’s property due to casualty; or (C) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant (including, but not limited to, imminent foreclosure of or eviction from the participant’s primary residence, and the need to pay burial or funeral expenses of a participant’s deceased spouse or dependent. S ection 457 of the Code provides rules for the deferral of compensation by an indivi d ual participating in an eligible deferred compensation plan as defined in section 457(b) . Section 457(a)(1)(A) of the Code provides that in the case of a participant in an eligible governmental deferred compensation plan, any amount of compensation deferred under the plan and any income attributable to the amounts so deferred shall be includible in gross income only for the taxable year in which such compens a tion or other income is p aid to the participant or beneficiary. Section 457(b)(5) prescribes that an eligible deferred compens a tion plan must meet the distribution requirements of section 457(d) . Section 457(d)(1)(A) provides that for a section 457 plan to be an eligible plan, t he plan must have distribution requirements providing that under the plan amounts will not be made available to participants or beneficiaries earlier than i) the calendar year in which the participant attains age 70 1/2, ii) when the partic i pant has a sev erance from employment with the employer, or iii) when the participant is faced with an unforeseeable emergency as determined under Treasury regulations.

PLR - 138844-09 3 Section 457(d)(2) requires a plan to meet the minimum distribution requirements of section 401(a)(9 ) as described in §§ 1.409(a)(9) - 1 thru 1.401(a)(9) - 9. Section 457(e)(1)(A) defines an eligible employer to be a state, political subdivision of a state, and any agency or instrumenta l ity of a state or political subdivision of a state. Section 457(g) pro vides that a plan maintained by an eligible governmental employer shall not be treated as an eligible deferred compensation plan unless all assets and rights purchased with such deferred compensation amounts and all income attributable to such amounts, pro perty, or rights of the plan are held in trust for the exclusive benefit of partic i pants and their beneficiaries. Section 457(g)(2)(A) provides that a trust described in se c tion 457(g)(1) shall be treated as an organization exempt from tax under section 50 1(a). Ba sed upon the information submitted and the representations made, we conclude as follows: 1. The State Plan, as amended and restated effective January 1, 2008, constitutes an eligible deferred co m pensation plan as defined in section 457(b) of the Code, as amended, and the regulations thereunder. 2. Amounts of compensation deferred in accordance with the terms of the State Plan, including any income attributable to the deferred compens a tion, will be includible under section 457(a)(1)(A) in the reci p i ent's gross income only for the taxable year or years in which the amounts are paid to a participant or beneficiary in accordance with the terms of the State Plan. 3. The trust associated with the State Plan satisfies all applicable requirements of sect ion 457(g), and will be treated as an organization exempt from taxation under section 501(a) . Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or ref erenced in this letter. If the State Plan is significantly modified, this ruling will not necessarily remain applicable. This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent. In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to your authorized representative.

PLR - 138844-09 4 The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. W hile this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination. Sincer ely, Cheryl E. Press Senior Technician Reviewer, Qualified Plans Branch 2 (Employee Benefits) (Tax Exempt & Government Entities) Enclosure Copy for purposes of section 6110 cc: