415/401(a)(17) Excess Plan Payout Date

[Guest Patrick Foley]

I am concerned about the timing of benefit commencement under a nonqualified plan whose only benefit is the amount lost under a qualified defined benefit plan under §415 and §401(a)(17). Before 409A, the nonqualified plan provided for benefits to commence at the same time as benefits start under the qualified plan. Notice 2005-1 and Prop. Reg. 1.409A-3 appear to disallow that approach after the transition period and require benefit commencement under the NQ plan to be determined objectively, with reference to either separation from service or a date certain. An actuary colleague questions the sense of this, given the link between the plans. The proposed regulations have several provisions addressing NQ plans linked to qualified plans, but nothing relevant to this question.

I would appreciate any comments.

Thanks!

[Guest Patrick Foley]

I see now that the IRS anticipated my question by several months and, in Notice 2006-79, extended the ability to link a payment election under a NQDC plan to an election uncer a qualified plan through 2007, implying that, absent a surprise in the final regs, it's gone after 2007.