Employment & Environment: Employee Benefits

Question 1

Employment & Environment:
Employee Benefits
ERISA

Answer 1

Purpose
- protect employee rights in existing pension plans
- offer tax incentives to employers
- either tax cuts or deferred taxation
Characteristics
- preempts state law
- applies to employee benefit and welfare plans
- prohibits discrimination against lower level employees
- set up Pension Benefit Guarantee Corporation for plan termination insurance
- does not require employers to setup plans
- employee contributions must “vest”
- generally vest employer contributions after 5 years
- also partial vesting
- standards on investing of funds
Does NOT Apply To:
- Federal, state, and local governments or
- church plans
Enforced By:
- Department of Treasury
- private lawsuits
Types of Pension Plans
- Defined Benefit
- Defined Contribution
- 401(k)

Question 2

Employment & Environment:
Employee Benefits
Pension & Retirement Plan Liability

Answer 2

Fiduciary Duty on Plan Management
- anyone named in plan as fiduciary
- anyone who controls the plan, renders advice for a fee, has discretionary control
- accountants who merely audit are not
Duties
- act with reasonable care
- discharge duties solely in interest of plan participants
Breach
- can be liable if the accountant participates in fiduciary’s breach
- or malpractice suits

Question 3

Employment & Environment:
Employee Benefits
COBRA

Answer 3

• provides health insurance after job loss
• Qualifying Events
  
  • Termination
  • Reduction of hours causing health insurance loss
• keep previous coverage if:
  
  • they pay for it
  • for employee and spouse, and dependent children
  • 18 months from qualifying event
  • 29 months for disability

Question 4

Employment & Environment:
Employee Benefits
Family Medical Leave Act

Answer 4

• balance employees workplace demands with family
  Provisions
• eligible employee is entitled to 12 weeks of unpaid leave without losing job
• birth of child
• placement of adoptive child
• personal serious health condition
• care of son, daughter, spouse, or parent
• impending order due to active duty of child, spouse, or parent
  Eligibility
• 1,250 hours in 12 months

Question 5

Employment & Environment:
Employee Benefits
Missed

Answer 5

• officer/director is a “responsible person” not CPA
• gifts are not taxable income under SECA
• if the company does not remit the employees’ share, it remains primarily liable
• self-income on quilts and director fees