The U.S. Department of Labor (DOL) has issued Advisory Opinion
2025-03A, in which it resolves a dispute over Morgan
Stanley's deferred compensation program, which provides
incentive awards to financial advisors. In its opinion, the DOL
found that the program is a bonus, not a pension plan subject to
the Employee Retirement Income Security Act (ERISA).
The impact of the DOL opinion for Morgan Stanley employees is
that if they leave the company before the end of the deferred
compensation program's vesting period, they will not receive
the incentive funds.
According to the DOL opinion, the program is not the type of
income deferral program that falls within the purview of ERISA.
More specifically, the program does not systematically defer
payments to the termination of employment or a future date, which
would subject it to ERISA and prevent the DOL from characterizing
it as a bonus program.
