Employer Changing Type of Payment

[Guest Grumpy456]

A 409A plan requires participants to elect future payments in the form of a lump sum or installment (over 5 or 10 years). The plan contains a reservation of amendment clause permitting the employer (the so-called "service recipient") to amend the plan.

Can the employer unilaterally require payment in the form of a lump sum, even with respect to amounts already deferred to the plan, without violating 409A?

Does it matter whether any of the benefits are so-called "grandfathered benefits", i.e., pre-409A benefits?

Thanks so much for your help.

[QDROphile]

Before December 31, 2007, in accordance with transition rule. Do you care if grandfathered amounts remain grandfathered?

[Steelerfan]

Can the employer unilaterally require payment in the form of a lump sum, even with respect to amounts already deferred to the plan, without violating 409A?

Some plans require that an amendment not reduce any material rights under a plan. I'd say this change would take away a substantial tax benefit and thus would normally be a contractual violation w/o participant consent, otherwise the transition rule would allow it.