"I want to revisit a post from a few years ago, relating to the acceleration of vesting/payment that is appropriately treated as a short-term deferral.
https://benefitslink.com/boards/index.php?/topic/63098-accelerating-payments-under-short-term-deferral-exception/
The question I have is generally whether company discretion to accelerate the vesting payment could serve as a premise the payment is no longer subject to a
substantial risk of forfeiture. Below is a brief fact-pattern of a situation that may present this issue, of course the facts are exhaustive so add in any points or items that may impact the analysis.
Example - Under a long-term bonus plan an employee is entitled to as a bonus payment of a portion of net company earnings for years 1 with 50% of the bonus being payable on 3/15 year 2 and 50% payable on 3/15 year three. The plan
provides the employee must be employed on the payment date to receive the bonus. An employee wants to retire 1/1 Year three, and the company decides to move up the vesting date and payment of the second 50% payable on 3/15 to the employee's retirement.
My understanding from the previous post is that since the payment was not covered under 409A to begin with, as a short term deferral, the acceleration is permissible and not a 409A
violation. My question however, is whether the employer's discretion to accelerate the payment could be argued to no longer make the amounts subject to a substantial risk of forfeiture due to the risk of forfeiture not being substantial due to the company's discretion to voluntary accelerate the payments, cause the payment to fall outside of the short-term deferral. I know this is a facts and circumstances test, but does anyone have
any insight on whether the company discretion may impact the substantial risk of forfeiture analysis? Thanks in advance for your time in reviewing and responding!"
