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457(f) Substantial Risk of Forfeiture


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2 replies to this topic

#1 kgr12

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Posted 13 July 2007 - 07:27 PM

Anyone have any thoughts on there being a substantial risk of forfeiture (for 457(f) purposes) resulting from a requirement in a 457(f) plan that a pre-condition to getting the benefit is that a participant must give the employer a waiver of all rights to sue the employer?

To make it interesting, let's say that there's no service requirement, just the notion that you forfeit the benefit if you're not willing to execute the waiver at the time that you are otherwise entitled (in a 409A compliant way) to the benefit.

Seems to have a lot more substance, particularly in the tax-exempt context, than the use of a non-compete as a means of preserving a SRF. Also, because such waivers typically apply to claims known and unknown to the employee, it seems harder to attack on a facts and circumstances basis than the non-compete scenario.

#2 QDROphile

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Posted 14 July 2007 - 09:22 AM

No. You are in the 409A world now.

#3 Guest_named_mjb_*

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Posted 15 July 2007 - 11:52 AM

I thought under reg. 1.457-11, example 4 if there is no requirement to perform substantial future service then there is no substantial risk of forefeiture under 457(f)(3)(B) and there is no deferral of comp. Only get to 409A if there are earnings on amt included in comp that are deferred until later yr.