Employment Benefits

1
Employment Benefits

• Business Organizations II
• LAP 202
• Mike Brigner, J.D.

2
Fringe Benefits

• Some Mandated By Law
• Social Security 3 types
• SS Retirement for age 62, 65 rising
• (FICA tax to Employer and Employee)
• SSI (Supplemental Income)
• SSD (Social Security Disability)
• Unemployment insurance
• (Was OBES. Now JFS, Jobs Family Services)
• Workers compensation insurance (OBWC)
• (Some law firms do nothing but S.S. or Workers
  Comp representation)

3
Fringe Benefits

• Not Mandated By Law
• Health Insurance (Note Mass, Hawaii every
  European country has mandatory health insurance)
• Accident and Disability Insurance (ADD)
• Life Insurance
• Retirement Plans
• Stock Options
• Perks
• These all may be included in Cafeteria Plan for
  employee to choose from. Usually deemed taxable
  compensation.

4
Employee Welfare Benefit Plans

• Why offer?
• Tax benefit to employer
• Contributions by employee employer
• Required by law?
• Reporting and disclosure requirements
• (Complex, most local law firms dont handle)

Commonly called health insurance plans
Also includes disability benefits, life
insurance, dental, child care, legal services
plans.
5
Federal Laws re Health Ins.

• HIPPA Health Insurance Portability Act
• New employer must cover pre-existing conditions
• NOTE Pregnancy IS a pre-existing conditn
• COBRA Continuation of Benefits
• If employer has over 20 employees
• Upon leaving, employee may continue health
  insurance up to 3 years at own cost

6
ERISA

• Employee Retirement Income Security Act
• Every Ridiculous Idea Since Adam
• Complex, but the key to almost all pension plans
• (Few local law firms doing ERISA work)

7
Tax Benefits of ERISA-Qualified Retirement Plans
IRAs

• Deductible contributions for employers
  employees
• Employees not taxed on contributions made for
  them by employer
• Earnings on plan assets grow tax-free until
  distributed
• Many plans (401k) permit employees to contribute
  own money on pre-tax basis

8
ERISA Qualified Retirement Plans

• Defined Benefit Plans
• Sets certain pension benefit amount received each
  month
• Tax-deferred contributions
• So employee pays no taxes now on contributions
• Instead, employee is taxes when receiving
  benefits, when tax bracket should be lower

9
ERISA Qualified Retirement Plans

• Defined Benefit Plans (contd)
• Plus Employee can plan on definite retirement
  income
• Minus Costly for employer to administer
• Minus Employee gets one set amount, unless COLA
  provided
• Minus Employer may borrow pension , then go
  bankrupt employees have 0

10
ERISA Qualified Retirement Plans

• Defined Contribution Plans
• Sets amount employer will contribute into
  participants account each year
• Profit sharing plans -- 401(k) plans
• ESOPs --Profit-sharing plans
• Also tax-deferred contributions
• Where is ? Invested in stock market

11
ERISA Qualified Retirement Plans

• Defined Contribution Plans (contd)
• Minus Less certain retirement income for
  employee
• Minus Employer can terminate plan. No new
  added, but you keep what you have
• Plus Less costly for employer
• Plus Portable
• Plus Available for loans buying home, medical
  emergency, educational purposes

12
ERISA Qualified Retirement Plans

• Individual Retirement Accounts (IRAs)
• SEP-IRAs
• Roth IRAs
• Keogh Plans
• 401(k) Plans

13
Qualified Plan Reporting Requirements

• (http//www.irs.gov/forms_pubs)
• Determination letter (to assure qualified
  status)
• Form 8717 (User Fee)
• Original IRS Filing (Form 5300)
• Form 5300
• Copy of Plan
• Annual IRS Filing
• Form 5500

14
Employment Benefits

• Concluded
• Thank you
• Mike Brigner, J.D.