Removing a permissible payment event

[SycamoreFan]

An NQDC plan currently provides for payment upon the earlier of a 409A-compliant Change in Control event or a 409A-compliant Separation from Service. NQDC plan sponsor would like to remove Change in Control event as a payment event and leave only the Separation from Service as the permissible payment event.

The guidance in 1.409A-2(b)(6) indicates that the deletion of a permissible payment event is subject to the subsequent deferral election rules under 1.409A-2(b) where the deletion of the payment event may result in a change in the time and form of payment of the deferred amount. 1.409A-2(b)(6) also states that the subsequent deferral election requirements are applied separately to each payment upon each payment event.

I'm struggling to determine how to apply this guidance in this situation. Does this mean that the subsequent deferral election rules would require the change not to be effective for 12 months following the change, and for the payment event to simply be 5 years following a Separation from Service? This would seem to satisfy the five-year push requirement because in any instance, even if a Change in Control occurred immediately, the payment would be delayed an additional five years.

[401 Chaos]

I'm guessing the deferred amounts are already fully vested such that it's not an acceleration of vesting and payout?

If the amounts are not fully vested, seems the change in control rules may permit you to revise automatic vesting provisions upon a change in control and thus presumably push back payment.