Temp. Reg. § 53-4958-4T(b)(2)—Timing of Reasonableness Determination
The temporary regulations provide that the reasonableness of a fixed payment is determined when the parties enter into the contract providing for the fixed payment. Temp. Reg. § 53.4958-4T(b)(2)(i). This appears to be true without regard to whether the fixed payment is subject to a substantial risk of forfeiture. This is unlike the rule for determining the "date of occurrence" of an excess benefit transaction, where a substantial risk of forfeiture will delay the date of occurrence until there is no longer a substantial risk of forfeiture. Temp. Reg. § 53.4958-1T(e)(2).

For clarity it would be helpful to state specifically that the existence of a substantial risk of forfeiture does not affect the timing of the determination of reasonableness for a fixed payment. We suggest adding a clause at the end of the first sentence of Temp. Reg. § 53.4958-4T(b)(2)(i) that would read as follows: "without regard to whether the fixed payment is subject to a substantial risk of forfeiture."

The reasonableness of a non-fixed payment is made as of the date of payment. Id. It would seem that a substantial risk of forfeiture should be ignored for this purpose as well. If that is the intention, then instead of inserting the above clause, we suggest adding a new sentence at the end of Temp. Reg. § 53.4958-4T(b)(2)(i) that would read as follows: "The timing of the determination of reasonableness is made at the time that the right to payment is fixed regardless of the existence of a substantial risk of forfeiture with respect to the payment."