Title: Employment Benefits
1Employment Benefits
- Business Organizations II
- LAP 202
- Mike Brigner, J.D.
2Fringe 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)
3Fringe 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.
4Employee 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.
5Federal 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
6ERISA
- 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)
7Tax 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
8ERISA 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
9ERISA 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
10ERISA 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
11ERISA 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
12ERISA Qualified Retirement Plans
- Individual Retirement Accounts (IRAs)
- SEP-IRAs
- Roth IRAs
- Keogh Plans
- 401(k) Plans
13Qualified 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
14Employment Benefits
- Concluded
- Thank you
- Mike Brigner, J.D.