Age and Service Credit

[Guest expertnovice]

Employment agreement provides that employee's SERP benefit is calculated as though he were three years older for both age and service credit purposes. These fictional 3 years increase the PV of the benefit by almost $1 million.

Is granting the additional age and service credit an impermissible acceleration? Would the answer differ if the benefit of the additional three years was to qualify for a subsidized early retirement benefit?

I think the answer is no, but I can't find the cite to the rules on granting age and service credit in the final 409A regulations.

[Guest Harry O]

This seems to be changing the AMOUNT of the benefit rather than the TIME (asuming payment is contingent upon separation from service).

[Steelerfan]

I agree it looks like adding additional age and service credit would be an election increasing the "amount deferred". My guess is this type of action could only be effective prospectively and could not affect prior accruals, since those amounts are already deferred. It would be effectively impossible (or illegal) to increase the present value of the benefits already accrued since the legally binding right to payment of those amounts already attached and services were already performed. Anyone else have a thought?