There are a lot of restrictions on restructuring NQDC plans, but they might work to your advantage. Check with your employer and maybe a tax attorney, although it may be too late if the trigger event has occurred. You have to push out the constructive receipt 5 years to be able to modify. Then you could convert to some sort of payout schedule over several years.
Summary of IRS requirements (acknowledgment to Prudential)
A change in the time or form of a previously-elected payment may not take effect for 12 months and must provide for a new commencement date at least five years after the original beginning date. In addition, an election to change any payment scheduled to be made at a specified time or according to a fixed schedule must be made 12 months before the date the first amount was scheduled to be paid.
• An installment payout can be considered a series of individual payments or a single payment. A plan must treat all installment payments consistently.
• The rules regarding changes in the form and time of payment apply separately to each payout election. For example, if the participant elects to receive a distribution in 5 annual installments upon separation from service or in a lump sum upon death, the participant can change the form of one distribution without changing the other form. • An intervening event may override an existing payment schedule already in payment status. For example, a plan could provide that a participant will receive 6 installment payments upon termination, but also provide that if the participant dies after the payments begin, all remaining benefits will be paid in a lump sum.
