MSSB Adds Retirement Eligibility Tracking for Stock Plans

September 16, 2011 ( - Morgan Stanley Smith Barney has added a service to help corporate clients track retirement eligibility dates and collect employment taxes from employees who receive restricted stock units (RSUs) as part of their equity compensation.

The firm’s Total Administration system for global stock plans stores employees’ eligibility dates and the amount of shares subject to employment taxes. Based on this data and the participant’s tax information, Morgan Stanley Smith Barney will calculate the Social Security and Medicare taxes due and show a statement of the information on the participant’s online account.  

A press release explained that in certain cases, employees who receive RSUs could face unexpected tax consequences when they hit their employer’s “retirement eligible” date. If the risk of forfeiture on RSUs is eliminated on that date, the RSUs are considered vested, potentially triggering Medicare and Social Security taxes. As a result, employers must track individual retirement eligibility dates for participants with restricted stock units and collect taxes when due.   

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