Redeferring Part of a Scheduled Payment

[Guest Inquiring Mind]

I seem to recall that there was some guidance, probably informal, where IRS representatives indicated it would be permissible for a participant to redefer only part of a scheduled payment. For example, let's say the participant is scheduled to receive the balance of an account in a lump sum in 2012. The participant wants to receive one-half of the amount scheduled for payment, and redefer the other half until 2017 or beyond.

Does anyone recall seeing anything on this? Or have any thoughts?

[Guest George Chimento]

I seem to recall that there was some guidance, probably informal, where IRS representatives indicated it would be permissible for a participant to redefer only part of a scheduled payment. For example, let's say the participant is scheduled to receive the balance of an account in a lump sum in 2012. The participant wants to receive one-half of the amount scheduled for payment, and redefer the other half until 2017 or beyond.

Does anyone recall seeing anything on this? Or have any thoughts?

It all depends on how you read 1.409A-2(b)(2), which requires that the payment to be redeferred must be a separately identified amount.

Regulation states: "An amount is separately identified only if the amount may be objectively determined under a nondiscretionary formula. For example, an amount identified as 10 percent of the account balance as of a specified payment date would be a separately identified amount."

I cannot find anything in the regulation which specifically identifies whether a redeferral of a percentage of a scheduled payment, rather than a redeferral of the entire payment, is permitted.

I think it is probably OK to do this simply because of the quoted language above.