An important concept under IRC Section 409A for plans that have grandfather provisions. This is either a material enhancement in a benefit or right existing in a nonqualified deferred compensation plan as of October 3, 2004 (the enactment date of the American Jobs Creation Act), or the addition of a new material benefit or right that affects the amount earned and vested before January 1, 2005 (the effective date of the AJCA). These types of modifications can remove the special status of grandfather provisions, such as a haircut allowed for distributions at any time, and they expose the plan and the previously deferred amounts to all the 409A requirements and penalties.