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Showing results for tags 'nonqualified deferred compensation'.
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I'm working with a stock option that is currently a short term deferral because the option only vests upon a CIC. The client now wants to add termination of employment (except for cause) as a payment event. I am pretty sure the subsequent deferral election rules apply here, but the result seems impractical when using the possible CIC as the original payment date. I also see a problem with the prohibition against acceleration of payment, because of course, an employee could terminate before the CIC date. Thoughts?? -
So if an employee is part of a Long Term Incentive Plan, and they are now terminating after 20 years, they are eligible to receive their payments from the LTIP for the next 5 years, based on the plan. The question is reporting it - my understanding is that the Current Present Value of the total amount being paid over 5 years is to be reported on the this years W2 as an employee but for FICA purposes only as it has not been paid yet. I've heard this was done to benefit the EE as well as the company for FICA purposes, because the HCE has probably met the SS Maximum for the current year, so truly it's only reported for Medicare purposes. I also know that the total amount being added to Medicare earnings for this year must be reported under Box 12 Code Y for this current year. My question, over the next 5 years, the terminated EE will receive a payment from the LTIP, which is to be reported on a W2 for Federal Income Tax purposes only. What entry is necessary to reflected on Box 12?
