Escrow Payments

We had a transaction occur and as part of the transaction, our employees with Options and RSUs were required to be paid out.  However, as part of the transaction, we had to put money in an escrow account for a year to cover if we violated any representations.  So, instead of receiving the full $100/share the employees were entitled to under there Options and RSUs, they only received $80, and the additional $20 was put in the escrow account.  It's been a year, and we didn't violate any representations, so we are now releasing the additional $20, and we're wondering whether it should be included for 401(k) purposes?

Our Plan's definition of compensation specifically excludes payments from Options and RSUs, but we're wondering if this compensation should be treated as something different because it was held in an escrow account -- does that change the nature of the compensation somehow?

20 hours ago, ERISA-Bubs said:

We had a transaction occur and as part of the transaction, our employees with Options and RSUs were required to be paid out.  However, as part of the transaction, we had to put money in an escrow account for a year to cover if we violated any representations.  So, instead of receiving the full $100/share the employees were entitled to under there Options and RSUs, they only received $80, and the additional $20 was put in the escrow account.  It's been a year, and we didn't violate any representations, so we are now releasing the additional $20, and we're wondering whether it should be included for 401(k) purposes?

Our Plan's definition of compensation specifically excludes payments from Options and RSUs, but we're wondering if this compensation should be treated as something different because it was held in an escrow account -- does that change the nature of the compensation somehow?

I vote no.