ACT BY YEAR END: Timing of Severance Payments Where Payment is Contingent on Employee Signing a Waiver and Release
The IRS frowns on arrangements that allow someone to "game the system" and shift income back and forth across tax years. If a severance payment isn't due until after the departing employee signs a Waiver and Release, then the employee can theoretically hold off signing long enough to move the income into the following tax year. Employers need to amend their plans by the end of this year to prevent this.