Cash incentives, including signing bonuses and other incentive-based compensation, are a common means of attracting and motivating employees, especially in a tight labor market. For a variety of reasons, not all employees satisfy their contractual obligations and must repay compensation received.
A "clawback" happens when compensation that has already been paid to an employee must be returned to the employer. When that happens and an employee has elected to make a 401(k)-deferral based on the clawed-back amounts, it can create substantial headaches for the employer—especially if the employer has also made a matching contribution based on the deferral. Employers who use clawback provisions should be aware of some valuable steps they can take to protect themselves—and know that it's critical to pay attention to the letter of the law to avoid plan disqualification.
Continue Reading for Free
Register and gain access to:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
