Employee has a Deferred Compensation Agreement that begins 15-year payments upon termination of employment. As part of negotatied severance, parties want to delay the payout for 1 year after severance. Is this ok per 409A?

It is OK if you like paying taxes. Not permitted if you want to comply with the rules. A further deferral requires a minimum five year postponement and the change has to be made a year in advance of the the original trigger.

It might be possible to try an amendment now in 2009 that reads something like this:

The plan is irrevocably amended now to provide that if the employee is yet employed on January 1, 2011, payout shall not begin until the later of the year after employment terminates or the year 2015.

That would meet the the minimum 5 year postponement rule. If yet employed on January 1, 2011, then the amendment was made when at least one full calendar year intervened before payout would be made under the pre-amendment provisions.

I would have legal counsel research and give an opinion to such effect before I would try this.

There is a question whether such an amendment would meet the 5 year postponement rule. Suppose the employee terminates 1/1/2012. Prior to this proposed amendment, the employee would be paid in 2012. The amendment would delay the payment date to 2015. 1.409A-2(b)(1)(ii) states that the the plan requires that the payment with respect to which such election is made be deferred for a period of not less than five years from the date such payment would otherwise have been paid. Wouldn't that make the earliest payment 2017?

Good point. Such an amendment, if yet desired, might have to specify that payout would not begin until the 5th year following termination of employment.