This fix is from the community, details in the following location.
http://lists.research.att.com/pipermail/ast-developers/2014q1/003846.html
---
--- a/src/cmd/ksh93/bltins/alarm.c_org	Tue Mar 25 13:42:56 2014
+++ b/src/cmd/ksh93/bltins/alarm.c	Tue Mar 25 13:43:07 2014
@@ -122,7 +122,7 @@
 		tp->timeout = 0;
 	tp->flags |= L_FLAG;
 	tp->sh->sigflag[SIGALRM] |= SH_SIGALRM;
-	if(sh_isstate(SH_TTYWAIT))
+	if(sh_isstate(SH_TTYWAIT) && !tp->sh->bltinfun)
 		sh_timetraps(tp->sh);
 }
 
--- a/src/cmd/ksh93/sh/xec.c_org	Tue Mar 25 13:46:48 2014
+++ b/src/cmd/ksh93/sh/xec.c	Tue Mar 25 13:48:18 2014
@@ -2720,6 +2720,11 @@
 			break;
 		    }
 		}
+		if(shp->trapnote&SH_SIGALRM)
+		{
+			shp->trapnote &= ~SH_SIGALRM;
+			sh_timetraps(shp);
+		}
 		if(shp->trapnote || (shp->exitval && sh_isstate(SH_ERREXIT)) &&
 			t && echeck) 
 			sh_chktrap(shp);