Benefits Alert: FICA early inclusion for 2020 taxes in non-qualified pension plans

Depending on the results of the November 2020 election, potential changes in tax policy may cause plan sponsors to revisit their strategy regarding payment of taxes on non-qualified pension plan benefits. This alert speculates on possible increases in Federal Insurance Contributions Act tax and why there may be interest in the “early inclusion” option under Internal Revenue Code §3121(v) for sponsors of and participants in non-account balance (i.e., defined benefit) non-qualified deferred compensation plans, also commonly referred to as supplemental executive retirement plans or “Top-Hats.”