Grandfathered benefits for NDCPs (acceleration)

[holdco]

Hello everyone!

A client has a deferred compensation plan with grandfathered benefits. There are no haircut provisions in the plan. A participant in the plan has a lump sum deferral due to him on January 1, 2014 (his fixed retirement date), that he wants to accelerate to 2012, the year in which certain other deferrals are set to begin paying out in installments.

As it stands, I don't see any way that this acceleration would be permissible. A formal amendment allowing haircuts would be a material modification for 409A and would lose grandfathered status for the benefits.

However, what if the client just gave the participant a lump sum payment in 2012 with a 10-20 percent haircut? Is this allowed? Do we run afoul of 409A? If anyone can assist or perhaps point me to any IRS position on this subject, I would greatly appreciate it.

Thank you!