I'm looking under the proposed regs for 409A and I can't find when it is permissible to accelerate vesting? Can anyone help? Specifically, the question is can vesting be accelerated for certain employees over others?
Thank you.

Per informal comments from the IRS, acceleration of vesting is generally not a concern under 409A. You can do whatever you want.

The primary exception is grandfathered amounts. That is where vesting is an issue. You can't accelerate vesting as of 12/31/04 to grandfather an amount that wouldn't have been grandfathered.

The other area where it might make a difference is in amounts that are excepted from 409A because they pay out right after vesting. You want to make sure acceleration doesn't affect you there.

But for the most part if you have a non-grandfathered plan that you are treating as 409A vesting and what you do with it is not an issue.

Some caveats to E's answer: (1) accelerating vesting can have significant accounting ramifications for the non-accelerated amounts, (2) if payout is tied to vesting, accelerated vesting will accelerate distribution which is impermissible.

But you should note that tying distribution to vesting in a way that acceleration of vesting also accelerates distribution is in itself generally not permissible in a 409A non-grandfathered plan. You can't use time of vesting as the date of distribution because time of vesting is not on the list of permissible distribution events. So acceleration of vesting shouldn't automatically accelerate distribution. I think that the IRS indicated that's why they don't care much about vesting.

E -
I confess I haven't parsed the regs on this point but why is it a problem if vesting is accelerated and payment is made immediately following the accelerated vesting date? Wouldn't this qualify for the 2.5 month short-term deferral exception as long as the original agreement provided that all amounts would be paid immediately upon vesting (accelerated or otherwise)?

I said it generally wouldn't be permissible to accelerate distribution as a result of acceleration of vesting IN A 409A PLAN. What you described is not a 409A plan. So in that case you don't want to accelerate vesting without accelerating distribution or then you do have a problem, as I said in my first post.