Lecture 17Other 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

Payments for Time Not Worked

• 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

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

Employee Awards

• 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

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

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

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

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

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

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

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

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