Year of Failure - Vesting Date or Payment Date?

If deferred compensation was supposed to vest on December 31, 2019 and be paid out within the next 10 days (per plan document), and it wasn't paid, is the "year of failure" 2019 or 2020? 

10 days is a little stiff, where most plans allow much longer. Are you sure the plan document does not allow longer time frame and 10 days is mainly a

stretch goal ?

On ‎12‎/‎14‎/‎2020 at 12:30 PM, kmhaab said:

If deferred compensation was supposed to vest on December 31, 2019 and be paid out within the next 10 days (per plan document), and it wasn't paid, is the "year of failure" 2019 or 2020? 

 

What do you mean "supposed to vest?" Unless there is more going on in your facts, kmhaab, I would assume it did vest. It was supposed to be paid in 2020, so that would be year of failure. But check out 1.409A-3(d), which may allow you to still pay in 2020 and be OK.

It should really read "supposed to be paid out." It did vest on December 31, 2019. Thank you for your suggestion on 1.409A-3(d), I'll check it out.

I agree with Luke's reference. There is no failure for missing the 10 day window in the plan. The employee could complain, but for 409A purposes you are timely if paid by March 15, 2020, provided the employee did not select the payment year.