Advantages & Requirements of Using a Trust to Provide Supplemental Unemployment Benefits
Most employers elect to provide Supplemental Unemployment Benefits plans through a trust fund rather than directly through the company. A trust fund that meets the necessary qualification requirements is tax-exempt and, therefore, the contributions made by the...
Essential Requirements of SUB Plan
With some limited exceptions, all SUB plans seeking to meet the qualifications to be exempt from wages (and therefore exempt from FICA and FUTA taxes) must be substantially the same or identical to those described in Rev. Rul. 56-249, as modified by Rev. Rul. 90-72....
Introduction & History of SUB Plans
Introduction Supplemental Unemployment Benefit (SUB) plans provide compensation to employees in addition to state unemployment insurance during periods of layoff. SUB plans, when designed correctly, offer employers a way to provide employees with enhanced income...
Competitive Advantage with Prevailing Wage Bona Fide Benefit Plans
I have previously written on a contractor’s potential tax savings when utilizing a bona fide benefit plan to satisfy the requirements of the prevailing wage law. However, there are other ancillary advantages that can provide a competitive advantage for...
How a Contractor Can Save $1,200,000
A contractor can choose between providing the prevailing fringe benefit rate as additional cash wages or as bona fide benefits. The cost of paying the fringe rate as cash wages can be expensive since wages are subject to payroll taxes and payroll-based insurance premiums. In most circumstances, this includes FICA, unemployment taxes, workers compensation premiums, and liability insurance premiums. These costs are typically referred to as “labor burden” and can range between 15%–40% of payroll (depending on rates paid for workers compensation and liability insurance).