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Employment Benefits

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Health Insurance (Note: Mass, Hawaii & every European country has mandatory health insurance) ... COBRA: Continuation of Benefits. If employer has over 20 employees ... – PowerPoint PPT presentation

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Title: 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.
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