Transitional Relief / Linked Plans

[Guest billyj]

For periods ending before Dec 31, 2007, if a key employee has an NQDC election that is linked to a qualified plan election can the key employee take the distributions at the same time or is he still subject to the six month delay for his NQDC benefit?

[Guest Harry O]

If the amounts are not grandfathered (vested before 1/1/05), he needs to wait six months.

[Guest billyj]

thanks

[Just Me]

The Final Regulations (and prior iterations thereof) say that it is not a violation of Code Section 409A to make a distribution under a NQDC in the same form and timining as provided under a linked qualified plan. It is a reasonable interpretation of this provision to conclude that no six month wait applies to specified employees if the benefits are linked. The qualified plan does not have a six month wait -- and payment in the same manner as under the linked qualified plan is not a violation of 409A.

[Guest Harry O]

Just Me -

I didn't think that linking distributions to a qualified plan was permitted under the final regulations . . .

What am I missing????

[Steelerfan]

I think the transition rules allow linked plans to stay linked only through 12/31/07. After that the distribution provisions must be delinked. That's what we have done with our excess plan.

[Chaz]

I think the transition rules allow linked plans to stay linked only through 12/31/07. After that the distribution provisions must be delinked. That's what we have done with our excess plan.

Off the top of my head and without checking, my recollection is that the recent extension of the transition rules allows linking through the end of 2008.

[Just Me]

The original question relates to the transition rule....so the link is permitted through 12/31/08 with no 6-month holdout for specified employees.