TaxEsq
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Ronald J. Cappuccio, J.D., LL.M.(Tax)
Counsellor at Law
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1800 Chapel Avenue West
Suite 128
Cherry Hill, New Jersey 08002 USA
(856) 665-2121
Fax (856) 665-9005
E-mail: Ron@TaxEsq.com
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Employee Benefits for Small/Family Businesses
Employees desire non-salary "benefits" even when working for a small employer. Larger companies frequently have elaborate employee benfit packages that are just too costly for the smaller business. The solution can be so-called "optional employee benefits." These low-cost benefits to the employer can be a real attraction to employees.
What are Optional Employee Benefits?
Optional employee benefits are programs sponsored by the employer. Typically, they are at little or no cost to the employer. Just as important is that the employee is not taxed on the benefit. The best example is low-cost group insurance coverage.
Discounted Group Insurance Coverage
Most employees purchase many insurance policies. Typically, these insurances include:
- Automobile
- Homeowners
- Life
- disability
- long-term care
- Group Rates for Health Insurance (even if your company does not pay for health insurance coverage, offering a group plan may provide employees better benefits at a lower price than an individual plan.)
As an optional benefit to employees, these and other types of insurance coverage can be made available at discounted group rates.
College Education Family Savings Plan
College Education Family Savings Plans, also known as Sec. 529 plans, are tax deferred programs to permit savings for education. A parent or grandparent makes payments to the plan. The tax on the earnings is deferred until distributed to the child at the child's own tax rate.
How to Establish an Optional Benefit Plan
A small business can hire an insurance professional, at no cost to the company, to design low-cost group policies affording excellent coverage. (The insurance salesperson is happy to perform the services because of the potential commissions to be earned!) The company's employees then receive material indicating the availability of the benefit. Coverage and costs are described, and employees are invite to call the insurance salesperson for the details. Employees can pay for the insurance through payroll deductions. Some of the insurance may be paid for on a pre-tax basis. These policies frequently provide better coverage at lower rates making both the business and its employees winners!
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