I know it's been close to 2 years since you asked, but maybe this will still help or help someone else.
I am not a tax lawyer or anything similar. This is only my understanding of the situation, so confirm it for your personal circumstances. Don't count on my answer.
I just looked in to this because I have a benefit from a 409a plan. I am retired, but I don't think that matters. Certain events trigger a payment, separation from service being one of these possible events. When you get that payment, this amount will be reported on a W-2 or a 1099-MISC. Either way, it is added to income. Since you pay tax on it as ordinary income, the amount going to taxes is based on your marginal tax rate. A large distribution, like any other increase in income, might be taxed more, depending on whether that distribution pushes your AGI into a higher tax bracket.
