amend formula in NQDC Plan

[mariemonroe]

Is there any prohibition on amending a benefit formula in a NQDC Plan subject to 409A?

 

 

[XTitan]

Prohibition?  No.  What kind of amending are you thinking about?  If the change somehow potentially impacts the time and/or form of payment, you may be required to follow the 1 year/5 year rule.

[Luke Bailey]

Generally, 409A only prohibits or inhibits you from changing payment dates, but your question is way to general to really know what you have in mind.

[Louis Richey]

Agree no 409A issues generally, but could be ERISA issues despite being top hat. See Plotnick v CSC, 458 F.3d (4th Cir Ct App. Nov. 2017) for a very recent case on this very issue- right of sponsor to change the crediting rate.  High level answer from the case- proper process and nondiscrimination (fairness) in the change between participants.  This case held the participants did not make their case so the opinion of the App. Ct. is a good one for practical guidance on elements to avoid problems.

[mariemonroe]

The benefit is determined by a formula like a DB Plan. The proposed amendment would change the date on which the benefit is determined (e.g. as of 12/31/17 instead of 12/31/18).  Essentially freezing the benefit.

It would not affect the timing or form of the distribution.

[XTitan]

No issues at all.