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Substantial risk of forfeiture


britoski

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Here's a wierd one. For some complex reasons, a nonprofit client wants to implement an arrangement that will provide a former employee with monthly payments for the remainder of her life, but only after she reaches age 80. No death benefit. We are considering purchasing a deferred annuity, but the client would prefer to make payments directly, if we can structure the arrangment to satisfy 457(f). So here is the question:

Could a requirement to attain a certain age ever be a valid "substanial risk of forfeiture"?

My thoughts are, theoretically, yes. For example, if you wouldn't get a payment unless you attained age 120, I would say that the risk of forfeiture is nearly certain. Age 80 is clearly more troublesome, but could there be some reasonable methodologies to prove that the facts and circumstances support a SRF? When would it lapse?

I'm curious to see what creative thoughts you might have on this...

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  • 2 months later...
Here's a wierd one. For some complex reasons, a nonprofit client wants to implement an arrangement that will provide a former employee with monthly payments for the remainder of her life, but only after she reaches age 80. No death benefit. We are considering purchasing a deferred annuity, but the client would prefer to make payments directly, if we can structure the arrangment to satisfy 457(f). So here is the question:

Could a requirement to attain a certain age ever be a valid "substanial risk of forfeiture"?

My thoughts are, theoretically, yes. For example, if you wouldn't get a payment unless you attained age 120, I would say that the risk of forfeiture is nearly certain. Age 80 is clearly more troublesome, but could there be some reasonable methodologies to prove that the facts and circumstances support a SRF? When would it lapse?

I'm curious to see what creative thoughts you might have on this...

NP 457 plans with vested benefits are only available to highly compensated employees or a member of a select goup of management. Did employee belong to such group?

mjb

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  • 3 months later...

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