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409A account balance plan that says payment may be made in cash or in-kind. The plan is informally funded with COLI and payment is to be made in a lump sum. If the plan sponsor transfers the COLI policy to the participant as payment, is there an issue? I couldn't find anything in the Regs that prohibits this.

How long must a TPA of NQDC plans retain records for a terminated client? Is 7 years the norm? Can it be a shorter time period? What are general guidelines typically followed by other TPA firms for records retention related to NQDC plans and terminated clients?

This may not be the most appropriate board to post the message, but I'll roll the dice. I cannot find anything specific on this topc. Even the regulations on 401(k) hardship documentation do not actually state what length of time the plan sponsor must keep these records - just that it must. Does that mean there is no time frame and records are to be kept indefinitely? Or would 7 years be sufficient? What my client really wants to know is what is the shortest amount of time that these records must be kept?

Yes, guaranteed payments as defined in IRC Section 707. I do not know the "why." I only know that the client is asking to do it. Would such a deferral follow the election rules of performance-based compensation? Thank you for the responses.

Has anyone seen this? What election rules apply to such a deferral? What are the pros and cons of the plan allowing this?

I have the same question as Degrand. Is it a mandatory requirement that deferrals under a nonqualified plan be cancelled due to the safe harbor standard of a 401(k) hardship distribution? The 401(k) rules indicate that deferrals under all plans of the employer must stop, but 1.409-3(j)(4)(viii) says ". . . a service provider's deferral election may canceled due to an unforeseeable emergency or hardship distribution pursuant to 1.401(k)-1(d)(3)."

I know very little about subchapter T cooperatives, but perceive them not to be tax exempt entities, and therefore not subject to 457(f)? Do you agree/disagree? I appreciate any feedback.

I agree that the plan can continue and anything deferred after the change in control would be as if it is being put into a post-CIC bucket, where the plan sponsor could even change the plan design prospectively for the post-CIC dollars.

We've mainly seen plan sponsors choosing to adopt the new claims procedure rather than amend the disability definition. As a TPA, we are not recommending one course of action over another, but deferring to their advisors. Having the SSA make the determination has its own disadvantages.

Is there a regulation that defines "base salary" for purposes of a 409A elective account balance plan? I typically use a definition in my plan docs that describes what is versus what is not considered base salary, but I'm working with a takeover plan where the doc does not define base salary. The client continues to have fluctuations in contribution amounts due to PTO donations. They have always considered PTO as part of base salary. Is there any 409A standard definition or some other basis for me to look to? Thanks.

I am confident that nonqualified top hat plans will need to address the final rule, specifically when disability is a payment trigger; however, is the rule applicable if disability only accelerates vesting and is not a payment trigger? Would seem so, but I'm not certain. What if the plan only contains disability respective to the cancellation of a deferral election? Would the rule apply here as well? Thoughts are greatly appreciated. Thanks!

How do you interpret 1.409A-1(h)(2)(ii)? Does it require that a distribution from a 409A plan to an independent contractor be delayed for 12 months from the date of the expiration of the contract(s)?

Yes, The Pangburn Group. Our expertise is nonqualified plans using COLI or BOLI, typically for small to medium sized companies/banks. http://www.pangburngroup.com

Other than through a rabbi trust, is there any way a company can be prohibited from using their nonqualified plan assets as collateral for loans? I'm not aware of any. Does non-assignment play into this?

NQDC plan benefit is a percentage of the employee's annual compensation. In 2015, as a result of a 27th pay period, Employer ended up paying him more than it has in 2014 and prior years. In 2016, they will adjust what they plan on paying him, in order to account for the extra payment in 2015. In 2017, they will be back on schedule to pay 26 pay periods for the same total as he was given in 2014 and prior years. Is this an impermissible acceleration in 2015 and potential under payment in 2016? If so, is there an exception under 409A that the company can use? Do you have any other suggestions for how the company could handle the extra payroll/payment and subsequent adjustment?