Question

1. Explain the Safe Harbor rule for delaying an employee bonus.

2. What is the issue in Employee Benefits when Unions are present?

3. Explain why an employee census is important for Employee Benefits planning?

4. Where would severance pay likely show up on an income statement?

Answer 1

1. The Safe Harbor Rule states that missed deferrals should be based on deferral elections and the amount that should have been withheld from each employee's bonus check.

2. When unions are present, they make it difficult to terminate under-performing employees. This means that the employer has to unnecessarily spend on unproductive employees and thus restrains from hikes in benefits of employees who are actually productive.

3. An employee census takes into account every small detail of the employee such as age, number of dependents, addictions, habits, plans of waiving coverage, etc. All of this helps the employer to formulate something suited perfectly or closely to the employee's requirements. This is how it helps in creating optimal Employee Benefits.

4. It shows up on the income Statement as a part of Compensation Expenses along with other wages, bonuses and commissions paid or payable.