XTitan

Correct, at least as far as current balances. You might want to consider amending so that prospective balances automatically receive the 5 pay so those can commence at retirement without a 5 year delay.

If the plan doesn't permit it now, the plan would need to be amended, but the 1 year/5 year rule would need to apply as far as existing balances.

You may also want to review the proposed regulations on income inclusion: https://www.irs.gov/irb/2008-51_IRB/ar14.html

Yup

What was the "substantial risk of forfeiture" that delay taxation until separation?

http://www.dol.gov/ebsa/FAQs/faq_DFVC.html Q18: How does an administrator of a Top-Hat Plan participate in the DFVCP?The plan administrator must prepare the statement described in regulation section 29 CFR § 2520.104-23 and file it at the following address: U.S. Department of Labor Employee Benefits Security Administration Top Hat Plan Exemption 200 Constitution Avenue, NW, N-1515 Washington, DC 20210 Note: If a plan sponsor has more than one top hat plan that is participating in the DVFC program at the same time, a single statement covering all of the plans may be filed consistent with the general requirements for top hat plan filings under 29 CFR § 2520.104-23. The plan administrator must also submit to the DFVC program, either electronically or on paper through the mail or by using a private delivery service. If submitting to the DFVCP electronically, follow the calculator instructions for online payment at www.efast.dol.gov. Use the plan number 888 for all top hat plans. You will be given a receipt for your electronic submission. If sending your DFVCP submission to the Program using paper and making payment by check, complete the most current Form 5500 Annual Return/Report (without schedules or attachments), items 1a–1b, 2a–2c, 3a–3c, and use plan number 888 for all the top hat plans covered by the top hat plan filing under 29 CFR § 2520.104-23. The paper copy of the form must be signed and dated, and be accompanied by a check for $750 made payable to the U.S. Department of Labor, and mailed to: DFVCP P.O. Box 71361 Philadelphia, PA 19176-1361 There is no address to receive submissions from a private delivery service. Receipts are not given for payments by check. Note: A paper submission of the Form 5500 to the DFVC program is in addition to the submission of the statement described in regulation section 29 CFR § 2520.104-22 that is filed directly with the Department. Additionally, the Form 5500 prepared for DFVCP purposes should not be filed with EFAST2. The applicable $750 penalty cap is for each DFVCP submission, without regard to the number of plans maintained by the same plan sponsor for which the notices and statements are being filed or the number of participants covered by the plan or plans.

Many older plan documents include the anti-alientation language from Revenue Procedure 92-65 which was the argument that NQ plans were not subject to divorce procedings (i.e. DROs). On the other hand, from the 409A final regs: 1.409A-3(j)(4)(ii) Domestic relations order. A plan may provide for acceleration of the time or schedule of a payment under the plan to an individual other than the service provider, or a payment under such plan may be made to an individual other than the service provider, to the extent necessary to fulfill a domestic relations order (as defined in section 414(p)(1)(B)). Counsel should opine on whether payments can be made pursuant to a DRO without a plan amendment or if one is needed.

Non-tax-qualified corporate owned annuities are subject to current taxation, though I've always wondered whether they are arae treated as UBTI.

So when does "funded" become funded? Not a lot of guidance, but self-directed brokerage accounts may give the appearance that the company has turned over investment control of a bucket of corporate assets to plan participants. Is that enough to cause the plan to lose its unfunded status? That's a risk/legal question for counsel.

I'm not a smart alec either, but is there a customer service number on the provider paperwork? If the provider can't answer the question, then maybe another provider can. My experience is limited to institutional trustees/custodians where their form has the information needed to open the account and then they worry about the fund houses. Of course, cost is always a consideration.

Would you settle for IRS commentary buried in Notice 2005-1, the first guidance on 409A? The first line in the answer is what I belive you are looking for (and yes, 409A doesn't apply to 457(b) plans, but the sentiment is the same) - Q-36 What are the SECA tax consequences of a failure to satisfy the requirements of § 409A? A-36 Gross income of a self-employed individual (for example, a nonemployee director, partner, or independent contractor) derived by the individual from any trade or business is generally subject to tax in accordance with the Self-Employment Contributions Act (SECA) when includible in gross income. See §§ 1401, 1402(a). Accordingly, an amount derived from an individual’s trade or business that is includible in the self-employed individual’s gross income under § 409A is generally subject to the application of SECA taxes at the time such amount is includible in gross income.

In general, if the participant were make an installment election on existing balances, that would be a subsequent deferral election (1 year/5 year rule applies). Prospectively, it would be generally be treated as an initial deferral election, provided all the usually timing rules are followed, and plan amendments are in place.

I'd suggest reading through Notice 2007-62 on the intersection of 457(f) and 409A. http://www.irs.gov/pub/irs-drop/n-07-62.pdf

Can it be done? Sure. However, it's not only the amounts deferred to date that would be subject to the additional income tax. The cancellation of the deferral election would also likely be deemed an acceleration of benefits for amounts not deferred.

When it comes to nonaccount balance plans, timing of FICA is less an issue of vesting than it is when the benefit is "readily ascertainable". Given the SERP is based on the QP amount, subjecting the present value of the expected benefits to FICA at the time the benefit is calculable (no more salary increases or YOS to worry about) sounds reasonable. Course, I don't give tax advice either, blah, blah, blah.

I recall an email that said I apologize for any incontinence.

On the other hand, if you are talking about transferring "plan funds", are the assets currently in a trust? If so, you may need to check the terms of the trust document on whether this is an option. Many trustees will take direction upon distrubution to remit withholding to the appropriate taxing authorities. The trust may also have a reimbursement clause to permit the company to seek reimbursement for payments made from corporate assets.

I'm not a corporate tax guy, but my understanding is that (depending on the structure) that upstreaming the assets may be treated as a taxable dividend to the parent.

According to the BLS, CPI is scheduled to be released 10/30, so the expectation is that the COLA limits would be released same day.

Matches my spreadsheet, and the SS wage base is 113,700.

Assuming you're talking about assets in an irrevocable Rabbi trust, does the trust agreement have a reversion of excess assets provision or a recovery of benefits paid from corporate cash provision? If not, there is generally no way to get the assets out of the trust until all payments are made, though the trust document would be the best source for this info.

Not knowing the full details, I vote for probably not. The election had to irrevocable by the last day of the prior year, and lowering the limit in the current year could be construed as a partial revocation (i.e. an acceleration). Wonder if you could reduce the bonus by a similar amount?

If this was an "ad hoc" grant, then deferring within 30 days of grant should be permitted, given that vesting is more than 12 months after the date of such election.

I'd say yes. Haven't found anything in 409A that would permit the cancellation of a deferral election due to separation from service.

Notice 2007-62 V. INTERACTION OF §§ 409A AND 457(f) UNDER ANTICIPATED STANDARDS Under the rules at § 1.409A-1(b)(4)(i) relating to short-term deferrals, a deferral of compensation for purposes of § 409A does not occur if the plan under which a payment is made does not provide for a deferred payment and the service provider actually or constructively receives such payment on or before the first day of the applicable 2½ month period. Under § 1.409A-1(a)(4), the inclusion in income of an amount under § 457(f) is treated as a payment of the amount for purposes of the short-term deferral rule contained in § 1.409A-1(b)(4). If the standard for a substantial risk of forfeiture for purposes of § 409A described in Part IV of this notice is adopted, a substantial risk of forfeiture under § 457(f)(1)(B) could not lapse later than the date the substantial risk of forfeiture lapsed under § 409A and § 1.409A-1(d). Accordingly, if a participant under an ineligible plan under § 457(f) included an amount of deferred compensation in gross income when it ceased to be subject to a substantial risk of forfeiture under § 457(f), the amount generally would not be subject to § 409A because the right to the amount and the payment would qualify as a short-term deferral under § 1.409A-1(a)(4). However, the right to earnings on amounts that have previously been included under § 457(f) would be deferred compensation for purposes of § 409A unless the right to the earnings independently satisfied the requirements for an exclusion from coverage under § 409A. There are rumors that guidance will be forthcoming. Hope this helps.