457 & substantial risk of forfeiture & good reason term

[Locust]

I was watching a recent ALI ABA presentation by IRS reps, including Cheryl Press, on 457. She seemed to be saying that a 457(f) benefit where vesting was conditioned upon involuntary termination of employment or voluntary termination for "good reason" (within the meaning of 409A regulations) would not necessarily be a substantial risk of forfeiture (SRF). She seemed to say that the IRS was considering not accepting a voluntary termination for good reason as a SRF because it was not "verifiable" when the IRS auditors came in several years later to audit the payment. Note that Reg. ss 1.409A-1(n) clearly says that for 409A purposes a good reason termination (as defined in that section) will be considered an involuntary termination of employment. However, the only significance of this for 409A appears to be in the exception for a separation pay plan.

My issue is with 457(f) arrangements. In a 457(f) arrangement the SRF determines the date of taxation. So if a good reason termination is not a SRF, does its inclusion in a 457(f) arrangement result in immediate taxation?

I'm not going to eliminate a good reason termination as a vesting event in 457(f) arrangements based on what the IRS might do - it's too important for the executive, and I don't see why it should be treated differently for 409A and 457(f) purposes. Ms. Press is asking for comments on the recent Notice regarding new 457 standards, and this seems like a good area to address.

What do you think of this reasoning by Ms. Press?