NQ (409A) Plan -- lost the participant's distribution election

[ERISA-Bubs]

We have a retiring executive in our NQ Plan (subject to 409A) and we have no record of his distribution election.  We know how much we owe him, just not the time and form of payment.

We don't want to allow the executive to make a new election now, for obvious reasons.  Our solution is to pay under the Plan's default rules.  We know this is not perfect, but we don't have another option.  In addition, we are going to allow the participant (if he wants to) to sign an affidavit that confirms (1) my actual election was _____, (2) that election was made timely under the 409A rules (i.e. prior to the year the amount in question was deferred), and (3) in the even the IRS finds this affidavit (and payment thereunder) violates 409A, the company is not responsible for any adverse tax effects.

Obviously, this is a bad situation and no solution is perfect.  Has anyone else run into this and/or do you have a better solution?

[CuseFan]

Paying under the default rules is certainly the safest way to proceed. The timing should be defined by the plan, right, unless he made a subsequent election that deferred it five years? Or does the plan allow timing election as well, like either the earlier of or later of age 65 or termination of employment? If he is 12 or more months before payment must be made under terms of the plan he can make an election now but must defer 5 years beyond that, so only useful if he doesn't want/need the money.

As noted, the affidavit method has its risks but any and all tax consequences hit the employee rather than the employer is my understanding, so I don't think the company is liable regardless. That said, doesn't hurt to have that added layer of indemnity.

I have not seen this before.