By making these reimbursements tax-free, what the salary reduction plan does is to convert all of these expenditures that you would normally incur into "deductible" expenses--whether or not they normally would be allowed as a deduction.
Under a salary reduction plan, though, if you know your medical insurance premiums are going to be $500 a month, you reduce your salary by that amount, and the $6,000 expense is reimbursed to you tax-free.
Selling and administrative costs in this segment declined 4% in the second quarter when compared to the prior year primarily related to benefits realized from the salary reduction plan implemented by the Company in fiscal year 2009, lower bad debt expense, and other overall cost reduction efforts.
Selling and administrative costs in this segment for the second quarter of fiscal year 2010 declined 12% when compared to the prior year on benefits realized from the salary reduction plan implemented by the Company in fiscal year 2009, lower profit-based incentive compensation costs, lower bad debt expense, and other overall cost reduction efforts.
This salary reduction plan
is expected to result in expense savings of over $900,000 on an annualized basis.
To avoid immediate taxation, deferred compensation plans--which include salary reduction plans
, 401(k) wrap-arounds and supplemental executive retirement plans--executed after Dec.
The bill would increase the dollar limit on annual elective deferrals under Section 401(k) plans, Section 403(b) annuities, and salary reduction plans
in $1,000 annual increments until the limits reach $15,000 in 2005.
Other provisions would relieve top-heavy rules, streamline the reporting rules and the deduction rules for small businesses in order to afford them the opportunity to offer more generous defined contribution plans, eliminate the IRS user fees for small business plans and provide incentives for employers to establish salary reduction plans
that will automatically enroll employees.
Increase and index the current catch-up contributions, and allow catch-up contributions under all salary reduction plans
for anyone age 50 and older.
Employees who aren't contributing to salary reduction plans
should ask themselves, 'Can I afford not to?
25 /PRNewswire/ -- Health insurance, group life insurance, and salary reduction plans that enable employees to accumulate tax-free savings for retirement are the most frequently offered employee benefits, according to a nationwide survey of 217 companies by the Human Resource Advisory group of Coopers & Lybrand L.
Group life insurance is offered by 98 percent of the companies, and salary reduction plans by 92 percent.