I am eligible for a 409A Deferred Compensation Plan. The rules may or may not be the same. It sounds like they might be similar. 409A plans are based on class years. The distribution is selected prior to that years contributions. Before the first distribution, distribution elections can be changed. Due to Enron, any change in distribution election can not take effect for 5 years. Taxes are due when funds are distributed. Distributions are taxed as regular income. It isn't an annunity. Distributions are based on the existing balance at the time of the distribution. Distributions will vary as investments gain/lose value. One distribution choice is monthly over 3 years starting 6 months after separation. The distribution amounts are 1/36, 1/35, 1/34 of the then current balance. Once the percentage is selected for the year it CANNOT be changed. It doesn't matter what financial problems you may experience, your employer is not permitted to alter the amount.
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