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Lowering Normal Retirement Age

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Our NQ plan allows participants to take a lump sum distribution or elect a 10-year payout at a Normal Retirement age of 59.5 Our industry competitors seem to have a Normal Retirement Age of 55  in their NQ plans.  We're considering lowering the age but are  concerned about complying with 409A. Does it make any sense to consider lowering the age or is there too much risk of 409A violations?



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This is complicated, but based on your brief description it sounds like lowering the NRA for amounts already accrued under the plan could, depending on other facts not included in your description of plan provision, result in an impermissible acceleration of time of payment.

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I'm guessing that the participant gets one form of distribution if they separate before hitting NRA and a different distribution form after NRA.  If that's the case, then changing NRA for amounts accrued would be changing the benefit formula with would impose a 5 year delay (kind of the complete opposite of what lowering the NRA would achieve).  Prospective would work just fine. 

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