ERISA25 Posted August 22, 2012 Posted August 22, 2012 Plan was created for employees to require payment only upon involuntary separation from service. The company decided to include a director in the plan and just slotted him in under same terms as employees. It was not intended to limit payment for director to only involuntary sepration from service as that term would not seem to apply to a Director in the same way as an employee. I would like to change the payment term from involuntary to any separation from service, but it does not appear as though I can do that under the regulations without running afoul of accelleration/re-deferral rules. One potential argument is that this was a scrivener's error or that the term "involuntary separation" is ambiguous and subject to interpretation as applied to a director. Any thoughts?
401 Chaos Posted November 8, 2012 Posted November 8, 2012 Without having given it much thought, I wonder if you could simply remove the director from this plan and say there was an error in including the director in it since the Plan was not intended to cover directors. Then, you could do a separate, one-off arrangement for the director to provide for benefits upon leaving the board, etc. that was drafted to specifically cover the director and address 409A issues. Not sure that would fly if the director has technically been included already but I would think that would be better than trying to monkey with the terms of the existing plan which really seems to have been intended for involuntary terminations of employees. (I'm not really sure how you would revise the existing plan now to safely permit benefits in the case of any separation from service. Is the existing plan structured to come within a 409A exemption so that you could argue 409A does not really apply and the plan could be amended, etc. (provided the amendments continue an exemption or insure compliance with 409A)?
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