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Alternative Payment Dates

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NQDCP provides for a payment on a single, specified date, whether or not a separation from service has occurred, but the amount payable at that single, specified date is less if termination of employment occurs prior to that date.

However, there is one exception: If an involuntary separation from service occurs prior to the single, specified date, the accrued amount is paid in a single lump sum upon separation from service.

Does this exception violate the general rule in 1.409A-3© that there be a single payment methodology for all payments triggered by a separation from service? I think not, because the only payment triggered by a separation from service is a separation from service described in my exception. Any different views?

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Playing devil's advocate for a moment. Is the definition of involuntary separation subject to abuse? Is it objective and non-discretionary? 1.409A-3(c )(1) gets you the double trigger of CIC/separation and 1.409A-3(c )(2) gets you diferent forms based on age/YOS, but there isn't anything permitting a specific form for involuntary separation.

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There is no opportunity for abuse. Here's where I am coming from: The payment is at a specified date (which happens to be the 5-year anniversary of the NQDCP), and not dependent upon a SFS, with one exception, that being an involuntary SFS. Therefore, I think, you don't need either of the exceptions because there is only one form of payment on account of a SFS.

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