Employee fringe benefits and employer benefits in form include different kinds of non- wage compensations offered to employees as well as their regular wages or salaries. Most common in the US, such benefits may come in the form of medical benefits, dental care, vision care, relocation allowance or coverage for childcare, household supplies and miscellaneous expenses. Such instances where individual exchanges salaries for some form of profit sharing or other benefit is usually called a “payment plan” or “cash out program.”
There are many kinds of employer benefits that are available in the form of fringe benefits. One of the most common is the employer-provided retirement plan. This includes 401(k) s, IRAs and traditional pensions. There are many different retirement benefit plans, from simple and no cost 401(k) s to complex and expensive 401(k) plans with many investment options. All types of fringe benefits may be deducted by the employer at the time of retirement.
Another type of employer benefits is group benefits. These usually cover healthcare costs of the entire work force or a specific portion of it. For example, health care benefits that are provided to the entire company or staff may be termed as a fringe benefit. Such costs would include, hospital stays, medical equipment, therapies and prescription drugs, etc. Health insurance is also included in some group benefits.
Group benefits offered by some employers may also be called “key man” benefits. These would be very important to an employee, since these would come with great benefit rights. For instance, the right to earn cash bonuses and stock options would be a fringe benefit of these plans. Also, in certain circumstances, the employee could be entitled to get partial payments for lost earnings or for disability.
In order to determine whether fringe benefits are actually appropriate for employees, it is necessary to understand what exactly they are. fringe benefits are typically non-taxable fringe benefits paid to the employee by the employer. They are not tax-deductible fringe benefits, but are not tax-free fringe benefits either. This means that the employee would have to pay taxes on any money he or she receives under the plan. But, as long as the employee does not have any other non-taxable benefits, then he or she is not taxed on any amount received under the plan.
The tax rules for fringe benefits vary from one country to another. So, it is advisable for people planning to get any kind of fringe benefits to do extensive research about their countries’ tax rules. Most European countries have a unified tax system and its tax rules are almost very easy to understand. However, the UK and US have different tax systems and their fringe benefits could be viewed as being similar or different according to the perspective of the employee.