MSSB Develops Retirement Eligibility Tracking System

Morgan Stanley Smith Barney is offering a new 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.

MSSB’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, MSSB will calculate the Social Security and Medicare taxes due and show a statement of the information on the participant’s online account.  

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.