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Do I need to withhold 401k contributions  on a retention bonus after the employee terminates? The bonus is for staying until the sale was complete. The agreement states that we have 2 weeks to pay the bonus after the close of the sale (close of the sale= termination date in payroll).

Posted

What is definition of plan compensation? I assume some standard definition and bonuses are not excluded, so then you need to look at whether post severance compensation is excluded or not and there's your answer. Or as Bill Engvall would say, "Here's your sign."

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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