Unsigned NQDC Plan Document

[Christine Roberts]

If a corporation adopts a NQDC plan by documented board of directors action prior to the stated effective date of the plan, and participants complete individual salary deferral agreements prior to that time (or within 30 days), is there any reason why the IRS would not view the plan to have been "adopted" or "in existence" due to the failure a plan sponsor excutive to physically sign and date the plan document before its effective date?

Stated otherwise, would the IRS take a different position re: what constitutes adoption of a plan document (i.e. timely corporate resolution suffices) than it has taken in the qualified plan arena, as outlined in the attached thread.

http://benefitslink.com/boards/index.php?s...amp;hl=unsigned

I don't see anything in this regard in Notice 2010-6.

Any and all comments are appreciated.

[Peter Gulia]

Christine, it's at least possible for a directors' resolution or consent to have adopted a plan that then had enough writing to establish a plan. That the directors' act is recorded later doesn't by itself preclude treating the plan as established at the moment the directors acted if the directors then had read and considered sufficient writings. Of course, many stakes turn on how clear and detailed the adopted writings were, and whether those and a participant's election are consistent.

Also, consider that some of this might turn on relevant State law and the corporation's bylaws to find what act of the directors is or isn't sufficient as the act of the corporation. No matter which State's law governs the internal affairs of the corporation, it makes sense to check the bylaws.

If I can help you kick this around, my office time isn't closing any time soon.

[XTitan]

Does this help?

§1.409A-1©(3) Establishment of plan--(i) In general. A plan does not satisfy the requirements of section 409A and this section and §§1.409A-2 through 1.409A-3 and §§1.409A-5 through 1.409A-6, unless the plan is established and maintained by a service recipient in accordance with the requirements of this section, §§1.409A-2 through 1.409A-3 and §§1.409A-5 through 1.409A-6. For purposes of this paragraph ©(3), a plan is established on the latest of the date on which it

is adopted, the date on which it is effective, and the date on which the material terms of the plan are set forth in writing. The material terms of the plan may be set forth in writing in one or more documents. For purposes of this paragraph

©(3)(i), a plan will be deemed to be set forth in writing if it is set forth in any other form that is approved by the Commissioner. The material terms of the plan include the amount (or the method or formula for determining the amount) of

deferred compensation to be provided under the plan and the time and form of payment. Notwithstanding the foregoing, a plan will be deemed to be established as of the date the participant obtains a legally binding right to a deferral of

compensation, provided that the plan is otherwise established under the rules of this paragraph ©(3)(i) by the end of the taxable year of the service provider in which the legally binding right arises, or with respect to an amount not payable in

the year immediately following the taxable year of the service provider in which the legally binding right arises (the subsequent year), the 15th day of the third month of the subsequent year.