top 5 reasons construction companies should offer supplemental unemployment benefit plans

January 3rd, 2019|By Jeff Bennett

1. Employee Retention

Competition for good workers has never been higher. What better way to secure your workforce during a work slowdown or seasonal shut down than to provide them with cash benefits so that they can enjoy their time-off rather than look for work elsewhere.

2. They have no effect state unemployment benefits

Because SUB is not considered wages, employees are permitted to collect both state unemployment benefits and SUB.

3. They are not FICA taxable

If a SUB plan is designed properly, benefits are not subject to FICA tax. Some states also exempt SUB from state income taxes.

4. They are bona fide fringe benefits under the Davis Bacon Act and state prevailing wage laws

Contributions to a trust fund for purposes of funding SUB are creditable against the fringe benefit rate requirements.

5. They pay for themselves and are tax efficient

Contributions to SUB plans are deductible when paid into the trust, regardless as to when the benefits are actually paid. Because benefits are not considered wages they are not subject to employer taxes and premiums such as FICA, workers compensation, etc.

The fees to administer a SUB plan can be paid from Plan assets so therefore do not create an additional employer expense. Reasonably priced Plan providers such as DirectAdvisors charge significantly less than the FICA savings, which means the plans pay for themselves!


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