Successive/Sequential Ineligible Plans

[Christine Roberts]

457(f) plan provides for 10 year cliff vesting schedule; executive director continues working through 10th year and full amount of contributions made to (f) plan are included in her taxable compensation in year 10.

We know that rolling risk of forfeiture is no longer permitted under 409A.

Is there any reason why the employer could not start a NEW 457(f) plan with a new 3- or 5- or more-year vesting schedule, in Year 11?

409A contains language preventing an employer from starting up a new deferred compensation plan within 3 years of affirmatively terminating a pre-existing plan but I don’t think that completion of a vesting schedule = plan termination for this purpose. Treas. Reg. 1.409A-3(j)(4)(ix)©. Would welcome any comments pro or con.

[QDROphile]

You can start a new 457(f) arrangement prospectively. You can't do anything about the amount included because of the vesting in year 10. I would not try terms that provide for elective deferrals.