On November 8, 2010, the IRS published Rev. Rul. 2010-27, providing additional guidance regarding permissible “unforeseeable emergency” distributions from deferred compensation plans governed by § 409A or § 457(b). Generally, these plans are subject to distribution requirements or restrictions that allow, among other specified payouts, unforeseeable emergency distributions. The Revenue Ruling approves two types of unforeseeable emergency distributions not explicitly discussed in prior guidance.

Prior Guidance

“Unforeseeable emergency” guidance was first issued under § 457(b). Section 1.457-6(c)(2)(i) of the Treasury Regulations defines an unforeseeable emergency as a participant’s or beneficiary’s “severe financial hardship” resulting from one of a number of enumerated occurrences, including...