Fifth Circuit Holds Deferred Compensation Plan Is Governed By ERISA

The decision details important implications for employers that use deferred compensation arrangements.

The U.S. Court of Appeals for the Fifth Circuit issued a decision on July 14 in Tolbert v. RBC Capital Markets Corp.,¹ holding that a deferred compensation plan through which RBC financial advisors received annual bonuses and made other income deferrals was an "employee pension benefit plan" governed by the Employee Retirement Income Security Act of 1974 (ERISA).² The court reasoned that, although the RBC plan's "primary purpose" was not to provide retirement income, it nevertheless was governed by ERISA because its express terms "result[ed] in a deferral of income by employees for periods extending to the termination of covered employment or beyond."³