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

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