Changes in Triggering Events Sample Clauses

Changes in Triggering Events a. Overview Prior law generally permitted payment triggers that did not violate the constructive receipt doctrine.52 For example, a plan could provide that the employer would pay the benefits when an employee switched from full- time to part-time employment.53 I.R.C. § 409A lists exclusive triggers for payment of nonqualified deferred compensation.54 A nonqualified deferred compensation plan having triggers other than those permitted in § 409A will cause the participant to be in constructive receipt of all deferred amounts.55 The permitted triggers are: “separation from service,” disability, “death, a specified time,” change of control, and “an unforeseeable emergency.”56 With the exception of death, the permitted triggers are all defined in § 409A.57 As a result, triggers in an existing plan might not meet § 409A’s requirements, thus disqualifying the plan. For example, a nonqualified deferred compensation plan providing for a distribution upon a participant’s disability as determined under the employer’s insurance plan may not meet § 409A’s requirements unless the definition in the insurance plan matches § 409A’s definition.58 Given the particularity of I.R.C. § 409A’s definition, it is unlikely that any insurance plan offered by an employer contains a definition of disability that meets § 409A’s requirements. 51 Id. 52 See, e.g., Rev. Rul. 60-31, 1960-1 C.B. 174. 53 Id. 54 See I.R.C. § 409A(a)(2)(A). 55 Id.