SROF

[JustMe]

Concerning the short-term deferral rule, if a performance goal is required to be reviewed by the compensation committee and the compensation committee does not meet until the year following the year in which the performance goal is met, would the date of the committee compensation meeting be considered a SROF? For example - the EE meets the performance goal on 7/15/15, the compensation committee meets on 3/25/16. In order to satisfy the short-term deferral rule, must the payment be made on 3/15/16 or could it be paid on 3/15/17?

[jpod]

What happens if the employee quits prior to the Comp. Comm. meeting?

If the answer is that the employee forfeits the bonus, then the SROF wouldn't lapse until the Comp. Comm. meets.

If the answer is that the employee wouldn't forfeit, then I would next ask what can the Comp. Comm. actually do that would create a substantial ROF?

[JustMe]

Jpod, thank you for your quick response. This plan is setup so that the employee must be employed on the date in which the payment is made, so that is when the SROF is and we are good. However, some employers want only to require that the employee be employed on the last day of the year in which the performance is met. So then the bonus is not forfeited before the compensation committee meets. So I am not sure what the comp. committee could do to create the SROF.

[JustMe]

Anyone else have any opinions on this situation?

[ERISA-Bubs]

I agree with JPOD's line of thinking.

What if, instead of dropping the SROF on the last day of the plan year in which the bonus is earned, you drop the SROF on the first day of the plan year following the plan year in which the bonus is earned. That would buy you an extra year by just waiting one day.

[jpod]

I have to say that the simplicity of ERISA-Bub's suggestion is brilliant (at least insofar as 409A is concerned).