3547 / When do prohibited (and permissible) acceleration of payment requirements apply to private nonqualified deferred compensation plans under IRC Section 409A?

Accelerations of plan distributions outside the six primary permissible listed distributions are prohibited. Final regulations, however, define specified circumstances under which a plan may permit the acceleration of plan payments and, in effect, widen permissible plan distributions, as follows:

(1) To comply with a domestic relations order (a DRO, not a QDRO since there are no “plan assets” in a promise-to-pay nonqualified deferred compensation plan to levy against).

(2) To comply with a conflict-of-interest divestiture requirement, including foreign conflict of interest per 2016 409A clarifications.¹

(3) To pay income taxes due on a vesting event under a plan subject to IRC Section 457(f).