I have been asked if an employer may withdraw from an existing deferred compensation plan and start their own.

They are currently in a plan sponsored by an association they belong to.
They want to start their own deferred compensation plan. (okay, this part I know they can do)
Instead of continuing with 2 plans -- 1 with the association and 1 on their own -- they would like to transfer the account balances from the association plan to their own plan.

The Joinder Agreement specifically states this is allowed under the terms of the plan.

I'm trying to see if there are any negative tax implications from this. The Joinder Agreement describes one of the investment options as having stocks in it. I have no idea how they would do the accounting on this part, but the the only thing I can think of is that the employer would have any realized gain from the sale of the assets to fund the liquidation count as income for the year the funds are transferred.

Or, am I making this too complicated?

thanks

Christopher

Don't forget the "plan" is separate from the "trust". Not sure why you couldn't transfer the assets to a rabbi trust created by the employer without liquidating and recognizing gain (or loss). But as a practical matter if there were gain or loss, the employer would have to recignize it on their tax form as income, etc. from a grantor trust.