Can you reduce the deferred compensation benefit?

[panther 0]

Employer wants to reduce the deferred compensation benefit paid at termination of employment from $2.5M to $2M?  Is this permissible if we keep the same time and form of payment and the parties agree?  The 409A regulations (26 CFR 1.409A-1(c)(3)(vi)) envision that it is permissible to increase the benefit but I do not see any express approval of reducing the benefit.   

[XTitan 35]

As long as there isn't anything that would compensate the participant for the reduction (which could be viewed as an acceleration of benefit), it shouldn't be an issue under 409A.

[EBECatty 65]

You may want to review the substitution rule under 1.409A-3(f). In my experience, there is very rarely a voluntary relinquishment of deferred compensation without something else contemplated, either explicitly or implicitly. 

[FORMER ESQ. 56]

7 minutes ago, EBECatty said:

You may want to review the substitution rule under 1.409A-3(f). In my experience, there is very rarely a voluntary relinquishment of deferred compensation without something else contemplated, either explicitly or implicitly. 

Exactly! My gut feeling tells me that there is more going on here. My first question to the OP would be WHY is this executive relinquishing the deferred comp?

[panther 0]

This is the rare case where the executive is not accepting anything in return for the reduction but is agreeing to it knowing the employer's financial limitations.