Voluntary Separation Pay Plan

[Brian Haynes]

Any ideas on how to provide a voluntary separation pay plan under Section 457(f)? I have a College for a client that wants to negotiate with its union to provide a one-time lump-sum payment to an employee that decides to voluntarily terminate employment with 20 years of service with the College and between the ages of 55 and 62. Putting aside the Fort Halifax ERISA issue, if the arrangment is not considered a bona fide severeance pay plan when the IRS issues its final guidance, how can the College offer such a benefit without causing taxation when an eligible employee reaches the age of 55 but decides not to terminate employment? Notice 2007-62 talks about potential exceptions for window programs and collectively bargained separation pay plans. Does anyone think this type of arrangement might fall within one of these potential exceptions? If not, do you think it is likely the final guidance will grandfather collective bargaining voluntary separation play plans? Thanks for your help. This is not my main field of expertise and need some guidance.

[david rigby]

Duplicate post: http://benefitslink.com/boards/index.php?showtopic=51179