457(f) Vesting Amendment to Accelerate Vesting

[austin3515]

Let's say a 457f plan says participants balance becomes vested at age 55.  The participant is currently 50.  Can the plan be amended (At the employers election) to become vested at age 54 instead?  What about 53?  Is this strictly forbidden no matter what, or can these kinds of changes be made within certain parameters? 

[Luke Bailey]

Austin3515, I think you generally can accelerate employee's vesting, either plan-wide or for an individual. That will typically make the benefit faxable, of course. The outcome is going to depend on your plan design. If, for example, the plan is a simple "lump sum taxable and all paid at vesting" plan, then it's actually a short-term deferral under 409A, not really 457(f), and generally it is not a problem to accelerate vesting and tax on an STD. If you're plan had a hardwired payment date, instead of saying simply that the employee was taxable at vesting, that could present issues.