Different Distribution Elections for Each Year

[Guest cphcs]

Has anyone seen a plan that allows participants to make a new time and form of payment election for each year of deferrals? In other words, participant elects a lump sum for deferrals made in 2010 and then for 2011 elects installment payments. Assume the new elections are made prior to the year in question, at the same time as the deferral election.

I think this works as long as the election is made before any deferrals are made pursuant to that election. It would be an administrative nightmare, but seems permissible. Any thoughts or experience with this?

[QDROphile]

Not an unusual design.

[Guest Eric.]

Has anyone seen a plan that allows participants to make a new time and form of payment election for each year of deferrals? In other words, participant elects a lump sum for deferrals made in 2010 and then for 2011 elects installment payments. Assume the new elections are made prior to the year in question, at the same time as the deferral election.

I think this works as long as the election is made before any deferrals are made pursuant to that election. It would be an administrative nightmare, but seems permissible. Any thoughts or experience with this?

I have a number of NQDCP's that do this. As long as the elections are timely made in terms compliant under 409A, this is fine. In fact, since little flexibility remains, in my opinion, this is preferable for the participant.