This week we discussed employee group benefits. Employee group benefits are an arrangement that provides benefits for employees as group. These are beneficial because they are offered at lower rates, they have better coverage, the employer can deduct the cost, and the employee can exclude the value from their taxable income. There are x different types of employee group benefits, these are as follows: group medical plans, group term life insurance, group disability insurance, cafeteria plans, health savings accounts, voluntary employee beneficiary association plans, salary continuation plans, group long-term care plans, group retirement planning, and business continuation plans. The premiums for most of these accounts are deductible by the employer and excludable from the employees gross income except for group term life. Group term life insurance premiums are only excludable for the employee up to the first $50,000. In class we learned how to calculate the year inclusion that will be included in an employees income over the $50,000 threshold.
A flex spending account is a type of cafeteria plan in which employees can defer cash and these amounts are not subject to income tax or payroll tax. These deferred amounts have a "use it or lose it" provision. The funds will be forfeited after March 15th of the following year. FSAs are more beneficial to higher income earners where as the dependent care credit is more beneficial to lower income earners. In class, we evaluated each scenario to determine which benefit would be most beneficial to a person's particular situation.
We learned about buy-sell agreements. There are two types: cross purchase and entity purchase. In a cross purchase buy-sell agreement, each partner purchases life insurance on the other partners. In an entity purchase buy-sell agreement, the entity purchases life insurance on each partner. Buy-sell agreements are a type of business continuation plan that provides a business with the funds necessary to sustain business operations in the event a key employee or owner dies.
A flex spending account is a type of cafeteria plan in which employees can defer cash and these amounts are not subject to income tax or payroll tax. These deferred amounts have a "use it or lose it" provision. The funds will be forfeited after March 15th of the following year. FSAs are more beneficial to higher income earners where as the dependent care credit is more beneficial to lower income earners. In class, we evaluated each scenario to determine which benefit would be most beneficial to a person's particular situation.
We learned about buy-sell agreements. There are two types: cross purchase and entity purchase. In a cross purchase buy-sell agreement, each partner purchases life insurance on the other partners. In an entity purchase buy-sell agreement, the entity purchases life insurance on each partner. Buy-sell agreements are a type of business continuation plan that provides a business with the funds necessary to sustain business operations in the event a key employee or owner dies.