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Lecture 17 Other Nonretirement Benefits

Payments for time not worked Employee awards Other extra payments to employees No-additional-cost services and employee discounts. Dependent Care Adoption assistance Wellness programs Employee assistance programs Financial and retirement planning Miscellaneous benefits.

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Lecture 17 Other Nonretirement Benefits

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  1. Payments for time not worked Employee awards Other extra payments to employees No-additional-cost services and employee discounts Dependent Care Adoption assistance Wellness programs Employee assistance programs Financial and retirement planning Miscellaneous benefits Lecture 17Other Nonretirement Benefits

  2. Vacations Service or position Waiting periods Additional days Unused days Holidays Scheduled Floating Personal time off with pay Reserve/National guard duty Voting/jury duty Death in family Sabbatical leaves Supplemental unemployment benefit plans Payments for Time Not Worked

  3. Family and Medical Leave Act • 12 weeks within any 12 month period • No obligation to continue employee’s pay • Most benefits do not have to be continued • Pension eligibility/participation service • Continue health insurance • Employee must make required contributions • Employer continues contributions • Can recover if employee does not return to work • Old job or equivalent job given upon return

  4. Suggestion awards Taxed as income Service awards De minimis not taxed Higher values not taxed income if qualified plan awards Cannot exceed $1,600 per year Permanent, written program that does not discriminate Productivity and Safety Awards Productivity awards are taxable income Safety awards are taxable for professional, administrative, mangerial or clerical employees Qualified plan awards for other employees Employee Awards

  5. Other Extra Payments to Employees • Educational assistance • $5,250 received on a tax-free basis • Graduate courses excluded • May receive a tax deduction for taxable amounts • Cannot be discriminatory • Moving-Expense Reimbursement • Taxable income but may receive a tax deduction

  6. No-Additional Cost Services and Employee Discounts • Conditions for a tax-free benefit • Nondiscriminatory • No significant additional cost or lost revenue • Line of business the employee works in • Additional conditions for discounts • Real estate and personal investment property discounts and discounted loan rates excluded • Limit on size of discount • Merchandise discount <= gross profit margin • Services discount <= 20% of cost to nonemployees

  7. Dependent-Care Assistance • Child-care and eldercare benefits • Tax-free benefit up to statutory limits • $5,000 single or married filing jointly • $2,500 married filing separately • Benefits for care for a qualifying individual • Under 13 and allowed a tax deduction • Other dependent who is mentally or physically incapable of caring for him/herself • HCEs taxed if benefits are discriminatory

  8. Adoption Assistance • May reimburse for expenses • Legal and adoption agency fees • Medical expenses • Foster care • Transportation expenses • Additional expenses for foreign adoptions • Up to $5,000 provided as a tax-free benefit • Adjusted gross income must be <= $75,000 • Phased out for higher incomes

  9. Wellness Programs • Medical screening programs • Lifestyle management programs • Smoking-cessation programs • Fitness programs • Weight-reduction and nutrition programs • Stress-management programs • Not taxable income if related to a medical condition, de minimis, or for on-sight athletic facilities

  10. Employee-Assistance Programs • Help with certain personal problems • Treatment for drug or alcohol abuse • Counseling for mental, stress, family or marital problems • Financial, legal and tax advice • Crisis intervention • Medical or legal plans pay covered expenses • Non-medical employer payments taxable

  11. Financial and Retirement Planning • Financial planning for executives • Compensation, estate, investment and insurance planning, and preparation of tax returns • Typically on an individual basis • Taxable income for employee • Preretirement Counseling • Group Meetings • Financial planning • Living arrangements, health and free time issues • Not taxable as long as in a group setting

  12. Miscellaneous Benefits • Transportation/free parking • $65/mo. for transit passes or commuter vehicle and $175/mo. for qualified parking • Can choose benefit or cash, cash is taxable • Company cars • Value for personal use is taxable • Subsidized eating facilities • Provided on business premises • Furnished for the convenience of the employer

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