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Compliance December 30, 2015
NQ Plan Sponsor to Pay for Failing to Withhold FICA Taxes
Henkel Corp. has agreed to pay more than $3.3 million to nonqualified plan participants for not withholding FICA taxes from their plan contributions.
Reported by Rebecca Moore
A court has approved a settlement agreement between Henkel Corp. and its nonqualified retirement plan participants concerning Henkel’s failure to withhold participants’ Federal Income Contributions Act (FICA) taxes at the time contributions were made, as required by the plan.
The settlement amount is $3,350,000, and includes attorneys’ costs, any award to the lead plaintiff in the case and litigation expenses. The settlement also provides that retirees will receive a 40% gross up of benefit distributions to cover their tax expenses.
In February, the U.S. District Court for the Eastern District of Michigan found that, rather than properly withholding nonqualified retirement plan participants’ Federal Income Contributions Act (FICA) taxes at the time contributions were made, as required by the plan, Henkel Corp. caused participants to pay these taxes at the time of each benefit payment, effectively reducing their anticipated retirement benefits.
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