Is a sign-on bonus plan compensation?

[Guest youngt]

Has anyone dealt with the question of whether a sign-on bonus is compensation under a qualified plan? The employer offers a sign-on bonus to potential employees but the bonus is not received until the person actually becomes an employee and performs services for the employer. In other word, the bonus is not received until the service is performed. Also there isn't an employment contract. It seems to me that this enouhg to bring this bonus under the definition of 414(s) compensation-remuneration for services performed. I have seen cases where a sign-on bonus is not compensation subject to FICA taxes-but these are all cases where some individual (such as a baseball player) gets a sign-on bonus and the bonus is received regardless of whether the individual ever performs the service. Any ideas?

[Guest]

It depends on what the plan document says. Many plans exclude bonuses from eligible comp. If the plan includes it, it's not comp until it's paid i.e. after employment has begun.