Using Transition Relief to Avoid 6-Month Delay

[401 Chaos]

Question: Is there any issue in using the transition relief under 2007-86 to change the time of a vested separation payment currently set to be paid out upon a specified employee's separation from service over to an earlier fixed payment date? For example, suppose a specified employee entitled to a separation payment anticipates separating from service and receiving the payment in mid-2009 but, using 2007-86, instead elects to receive the entire amount in January 2009 prior to separating from service. The result of the change is that the employee not only gets the payment sooner because of moving up the payment date but also avoids the 6-month delay that would apply if the amounts were paid upon separation from service by changing the payment trigger from separation from service to a fixed payment date.

Does the answer change at all if the election is made proximate to a downturn in the financial health of the employer?

[QDROphile]

Too late to avoid payment for a 2008 termination.

[401 Chaos]

Q,

Sorry, typo. Anticipated termination is to be mid-2009. My apologies.

[QDROphile]

As a lousy typist myself, you have my sympathies. The transition rule will work as you describe. No strings attached. Life will be much more amusing when we lose the transition rule.