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Haircut provision

A pre-409A provision that allowed you to take money out of your NQDC account balance at any time but with a reduction (i.e. a “haircut”). There was no maximum or minimum percentage for haircuts on these in-service distributions, though they were usually in the 10%–15% range. Haircuts are now prohibited by Section 409A and were, in fact, among the reasons that provoked the creation of the 409A rules. They are no longer permitted for any amounts deferred since January 1, 2005, and thus apply only to grandfathered plans dating from before then. For details, see the related FAQ.