HEALTH ACCIDENT AND RETIREMENT BENEFITS CHAPTER 4 HEALTH

HEALTH, ACCIDENT, AND RETIREMENT BENEFITS CHAPTER 4

HEALTH INSURANCE • TYPES OF INSURANCE • TRADITIONAL HEALTH INSURANCE PLANS • HEALTH MAINTENANCE ORGANIZATIONS (HMO) • TRADITIONAL SCHEME • POINT OF SERVICE PLAN (POS) • PREFERRED PROVIDER ORGANIZATION (PPO) • STATE HEALTH INSURANCE EXCHANGES • KEY PART OF AFFORDABLE CARE ACT (ACA) 2

ACA HEALTH INSURANCE REQUIREMENTS • REQUIRES LARGE EMPLOYERS TO PROVIDE HEALTH INSURANCE • APPLICABLE LARGE EMPLOYERS (ALE) • 50 FULL TIME EMPLOYEES OR MORE • FULL-TIME EMPLOYEE DEFINITION: EMPLOYED ON AVERAGE AT LEAST 30 HOURS PER WEEK • SEASONAL WORKERS ARE TAKEN INTO ACCOUNT IN DETERMINING THE NUMBER OF FULL -TIME EMPLOYEES • DETERMINED EACH YEAR BY EMPLOYER BASED ON CURRENT NUMBER OF EMPLOYEES • EMPLOYER SHARED RESPONSIBILITY (ESR) • PROVIDE AFFORDABLE HEALTH INSURANCE TO FULL-TIME EMPLOYEES THAT PROVIDES MINIMUM ESSENTIAL COVERAGE FOR AT LEAST MINIMUM VALUE • METHOD DETERMINING ESR: MONTHLY MEASUREMENT OR LOOK-BACK MEASUREMENT 3

ACA HEALTH INSURANCE REQUIREMENTS • ACA INCLUDES • PATIENT PROTECTION AND AFFORDABLE CARE ACT • HEALTH CARE AND EDUCATION RECONCILIATION ACT • DEPENDENT CHILDREN UP TO AGE 26 MUST BE COVERED • PLAN CANNOT LIMIT COVERAGE IF DEPENDENT IS MARRIED • ANNUAL REPORTING: • FORM 1095 -C • MUST BE GIVEN TO EMPLOYEE BY JANUARY 31 • FILED WITH IRS BY FEB 28 (APRIL 1 ST IF ELECTRONICALLY FILED) 4

ACA HEALTH INSURANCE REQUIREMENTS • SMALL EMPLOYER HRA OPTION • 21 ST CENTURY CURES ACT • SMALL EMPLOYERS WHO DO NOT OFFER HEALTH INSURANCE TO THEIR EMPLOYEES • OFFER A QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENT (QSEHRA) • QSEHRA • PROVIDED ON THE SAME TERMS TO ALL ELIGIBLE EMPLOYEES • FUNDED SOLELY BY EMPLOYER, NO SALARY REDUCTION CONTRIBUTION ALLOWED • PAYS SINGLE EMPLOYEES UP TO $5, 250 AND FAMILIES UP TO $10, 600 ANNUALLY FOR MEDICAL EXPENSES • EMPLOYERS GIVE ANNUAL NOTICE AT LEAST 90 DAYS BEFORE THE START OF THE YEAR OR EMPLOYEE’S INITIAL ELIGIBILITY DATE 5 • W-2 REPORTING - VALUE OF BENEFITS: BOX 12, CODE FF

ACA REPORTING FORMS • FORM 1094 -C • TRANSMITTAL OF EMPLOYER-PROVIDED HEALTH INSURANCE OFFER AND COVERAGE INFORMATION RETURNS • FORM 1095 -C • EMPLOYER-PROVIDED HEALTH INSURANCE OFFER AND COVERAGE • FORM 8809 • APPLICATION FOR EXTENSION OF TIME TO FILE INFORMATION RETURNS • FORM 1094 -B • TRANSMITTAL OF HEALTH COVERAGE INFORMATION RETURNS • FORM 1095 -B • HEALTH COVERAGE 6

TAX TREATMENTS: CONTRIBUTION / BENEFITS • EMPLOYER-PAID PREMIUMS • EXCLUDED FROM INCOME • EMPLOYEE CONTRIBUTIONS • UNDER § 125 PLANS • EXCLUDED FROM INCOME AS ALLOWED UNDER PLAN • WITHOUT § 125 PLANS • INCLUDED IN INCOME • BENEFITS RECEIVED BY EMPLOYEE • EITHER DIRECTLY OR INDIRECTLY ARE EXCLUDED FROM INCOME 7

TAX TREATMENTS: CONTRIBUTION / BENEFITS • LIFE PARTNER CONTRIBUTIONS / BENEFITS • INCLUDES NON-SPOUSE COHABITANT AND DOMESTIC PARTNER • NOT EXCLUDED FROM INCOME • SAME-SEX SPOUSE CONTRIBUTIONS / BENEFITS • DOES NOT INCLUDE REGISTERED DOMESTIC PARTNERSHIPS AND CIVIL UNIONS • EXCLUDABLE FROM INCOME • W-2 REPORTING: • EMPLOYER-SPONSORED HEALTH INSURANCE: BOX 12, CODE DD 8

MEDICAL SAVINGS ACCOUNTS (MSA) • HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 • USED BY COMPANIES WITH 50 OR LESS EMPLOYEES • EMPLOYEES MUST BE COVERED BY A HIGH DEDUCTIBLE HEALTH INSURANCE PLAN • ANNUAL INDIVIDUAL DEDUCTIBLE: $2, 350 - $3, 550 • ANNUAL FAMILY DEDUCTIBLE: $4, 750 - $7, 100 • MAXIMUM INDIVIDUAL OUT-OF-POCKET EXPENSE: $4, 750 • MAXIMUM FAMILY OUT-OF-POCKET EXPENSE: $8, 650 • CONTRIBUTIONS CAN BE MADE BY EMPLOYEE OR EMPLOYEE; NOT BOTH • LIMITED TO 65% OF PLAN DEDUCTIBLE BY INDIVIDUALS • LIMITED TO 75% OF PLAN DEDUCTIBLE BY FAMILIES 9

MEDICAL SAVINGS ACCOUNTS (MSA) • TAX TREATMENT: • EMPLOYEE CONTRIBUTIONS: DEDUCTIBLE FROM INCOME ON PERSONAL TAX RETURN • EMPLOYER CONTRIBUTIONS: EXCLUDABLE FROM INCOME • MUST BE ESTABLISHED OUTSIDE OF A CAFETERIA PLAN, ALTHOUGH CAN WORK IN CONJUNCTION WITH A HIGH DEDUCTIBLE PLAN (HDHP) INSIDE OF A CAFETERIA PLAN • W-2 REPORTING: • EMPLOYEE CONTRIBUTIONS: BOXES 1, 3, 5 • EMPLOYER CONTRIBUTIONS: BOX 12, CODE R 10

COBRA HEALTH INSURANCE CONTINUATION • CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985 • REQUIRES HEALTH PLAN SPONSORS TO PROVIDE EMPLOYEES AND THEIR BENEFICIARIES WITH THE OPPORTUNITY TO ELECT CONTINUED GROUP HEALTH COVERAGE FOR A GIVEN TIME PERIOD SHOULD THEIR COVERAGE BY LOST DUE TO A QUALIFYING EVENT • TIME PERIOD IS GENERALLY 18 OR 36 MONTHS DEPENDING ON QUALIFYING EVENT 11

HEALTH REIMBURSEMENT ARRANGEMENTS • PAID FOR SOLELY BY EMPLOYER • REIMBURSES EXPENSES INCURRED FOR MEDICAL EXPENSES • PROVIDES REIMBURSEMENT UP TO A MAXIMUM DOLLAR AMOUNT • REIMBURSEMENTS ARE EXCLUDED FROM THE EMPLOYEE'S GROSS INCOME 12

HEALTH SAVINGS ACCOUNTS (HSA) • EMPLOYEE MUST HAVE A HIGH DEDUCTIBLE HEALTH PLAN (HDHP) • ANNUAL DEDUCTIBLE: INDIVIDUAL = $1, 400; FAMILY = $2, 800 • OUT-OF-POCKET EXPENSES: INDIVIDUAL = $6, 900; FAMILY = $13, 800 • CONTRIBUTIONS: • CAN BE MADE BY BOTH EMPLOYEE AND EMPLOYER • CAN BE PART OF CAFETERIA PLAN • ANNUAL LIMITS: INDIVIDUAL = $3, 550; FAMILY = $7, 100 • CATCH-UP OPTION AVAILABLE FOR EMPLOYEES 55 OR OVER • $1, 000 MAXIMUM PER YEAR • DISTRIBUTIONS ARE TAX FREE WHEN USED FOR MEDICAL EXPENSES • W-2 REPORTING - EMPLOYEE / EMPLOYER CONTRIBUTIONS: BOX 12, CODE W 13

FAMILY AND MEDICAL LEAVE ACT (FMLA) • APPLIES TO PRIVATE SECTOR EMPLOYERS WITH 50 OR MORE EMPLOYEES • ALLOWS 12 WEEKS OF UNPAID LEAVE IN ANY 12 -MONTH PERIOD • NEWBORN OR NEWLY ADOPTED CHILD • CARE FOR SERIOUSLY ILL IMMEDIATE FAMILY MEMBER • QUALIFYING EXIGENCY (NEED) FOR IMMEDIATE FAMILY MEMBER CALLED TO ACTIVE DUTY • ALLOWS 26 WEEKS OF UNPAID LEAVE IN ANY 12 -MONTH PERIOD • CARE FOR MILITARY SERVICE MEMBERS WITH SERIOUS INJURY OR ILLNESS 14

FAMILY AND MEDICAL LEAVE ACT (FMLA) • ELIGIBILITY REQUIREMENTS • EMPLOYED AT LEAST 12 MONTHS • WORKED AT LEAST 1250 HOURS WITHIN PREVIOUS 12 MONTHS • HOURS WORKED FOLLOWS FLSA RULES • LEAVE CAN BE TAKEN INTERMITTENTLY OR CONSECUTIVELY • EMPLOYER CAN REQUIRE: • MEDICAL CERTIFICATION BY A HEALTH PROVIDER • MEDICAL CERTIFICATION OF A QUALIFYING EXIGENCY • HEALTH BENEFITS CONTINUE DURING LEAVE • EMPLOYEE MUST CONTINUE TO PAY THEIR PORTION OF BENEFITS • PREPAID, PAID DURING LEAVE OR PAID AFTER AT EMPLOYEE’S DISCRETION 15

SICK PAY UNDER A SEPARATE PLAN • SHORT-TERM OR LONG-TERM DISABILITY PAYMENTS • EMPLOYEE PROVIDES FORM W-4 S TO HAVE FEDERAL INCOME TAX WITHHELD • TAX TREATMENT: • PAYMENTS DURING FIRST 6 MONTHS: • SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • NO FEDERAL INCOME TAX WITHHELD UNLESS FORM W-4 S RECEIVED • PAYMENTS AFTER FIRST 6 MONTHS: • NOT SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • NO FEDERAL INCOME TAX WITHHELD UNLESS FORM W-4 S RECEIVED • W-2 REPORTING- NONTAXABLE AMOUNTS ATTRIBUTABLE TO EMPLOYEE CONTRIBUTIONS TO PREMIUMS: BOX 12, CODE J 16

CAFETERIA PLANS • QUALIFIED BENEFITS COVERED IRC § 125 • ACCIDENT AND HEALTH INSURANCE PLANS • DEPENDENT CARE ASSISTANCE PLANS • GROUP-TERM LIFE INSURANCE • QUALIFIED ADOPTION ASSISTANCE • COBRA CONTINUATION PREMIUMS • ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE • LONG-TERM AND SHORT-TERM DISABILITY • § 401(K) PLANS • HEALTH SAVINGS ACCOUNT CONTRIBUTIONS 17

CAFETERIA PLANS • FUNDED • FLEX DOLLARS / FLEX CREDITS • SALARY REDUCTIONS • AFTER-TAX EMPLOYEE CONTRIBUTIONS CAN APPLY ON SPECIFIC COVERAGES • EXCLUDED FROM EMPLOYEE INCOME • BENEFIT ELECTIONS • OPEN ENROLLMENT • FIRST 30 DAYS OF EMPLOYMENT • QUALIFYING EVENT OCCURRENCE 18

CAFETERIA PLANS • NONDISCRIMINATION TESTING • ELIGIBILITY TEST • LOOKS AT EMPLOYEE GROUPS • CONTRIBUTIONS AND BENEFITS TEST • LOOKS AT BENEFIT AVAILABILITY AND BENEFIT SELECTIONS • SPECIAL HEALTH BENEFITS TEST • TESTS ARE PERFORMED AT YEAR END • SAFE HARBOR • REQUIRES THAT A CAFETERIA PLAN SATISFY MINIMUM ELIGIBILITY AND PARTICIPATION REQUIREMENTS AND MINIMUM EMPLOYER CONTRIBUTION REQUIREMENTS. 19

FLEXIBLE SPENDING ARRANGEMENTS (FSA) • A/K/A FLEXIBLE SPENDING ACCOUNTS OR REIMBURSEMENT ACCOUNTS • EMPLOYEE PRE-TAX CONTRIBUTIONS • CONTRIBUTION LIMIT: $2, 750 • REIMBURSEMENT FOR HEALTH CARE, DEPENDENT CARE, ETC. • UNUSED AMOUNT FORFEITED AT THE END OF THE YEAR • EMPLOYEE HAS 2 ½ MONTHS IN NEW YEAR TO SUBMIT PRIOR YEAR EXPENSES • EMPLOYER CAN AMEND PLAN TO ALLOW BALANCES OF $500 OR LESS TO CARRY OVER TO THE NEXT PLAN YEAR • EMPLOYER CAN AMEND PLAN TO ALLOW QUALIFIED RESERVIST DEDUCTIONS (QRD) 20

IRC § 401(A) • QUALIFIED PENSION PLAN • PROVIDES A BENEFIT THAT IS DETERMINABLE WHEN THE EMPLOYEE RETIRES • PAYABLE OVER A PERIOD OF YEARS • EMPLOYERS CONTRIBUTIONS ARE NOT BASED ON PROFITS • CAN BE EITHER A DEFINED BENEFIT (DB) OR A DEFINED CONTRIBUTIONS (DC) PLAN • PROFIT-SHARING PLAN • ALLOWS EMPLOYEES TO PARTICIPATE IN COMPANY PROFITS AS A RETIREMENT PLANNING VEHICLE WITH EMPLOYER CONTRIBUTIONS BASED ON A FORMULA • DEFINED CONTRIBUTION PLAN ONLY 21

IRC § 401(A) • ANNUAL COMPENSATION LIMIT: $285, 000 • ANNUAL CONTRIBUTION LIMIT: LESSER OF $57, 000 OR 100% OF EMPLOYEES’ ANNUAL COMPENSATION • CATCH-UP CONTRIBUTION: • EMPLOYEES AGE 50 OR MORE • ANNUAL LIMIT: $6, 500 • TAX TREATMENT: • SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • NOT SUBJECT TO FEDERAL INCOME TAX WITHHOLDING 22

IRC § 401(K) • CASH OR DEFERRED ARRANGEMENT (CODA) • NONDISCRIMINATION TESTING • ACTUAL DEFERRAL PERCENTAGE (ADP) TESTING • ACTUAL CONTRIBUTION PERCENTAGE (ACP) TESTING • AUTOMATIC SALARY REDUCTIONS WITHOUT AN EMPLOYEE ELECTION IS ALLOWED • QUALIFIED AUTOMATIC CONTRIBUTION ARRANGEMENT (QACA) • MEETS SAFE HARBOR PROVISIONS FOR ADP AND ACP TESTING • ELIGIBLE AUTOMATIC CONTRIBUTION ARRANGEMENT (EACA) • DOES NOT MEET SAFE HARBOR PROVISIONS FOR ADP AND ACP TESTING 23

IRC § 401(K) • ROTH OPTION AVAILABLE • POST TAX DEDUCTION • CATCH-UP CONTRIBUTION AVAILABLE FOR ROTH • PRE-TAX CONTRIBUTIONS AND POST-TAX CONTRIBUTIONS CANNOT EXCEED LIMITS • W-2 REPORTING – SALARY REDUCTION: • BOX 12, CODE D • W-2 REPORTING – ROTH: • BOX 12, CODE AA 24

IRC § 401(K) • ANNUAL COMPENSATION LIMIT: $285, 000 • ANNUAL CONTRIBUTION LIMIT: $19, 500 • CATCH-UP CONTRIBUTION: • EMPLOYEES AGE 50 OR MORE • ANNUAL LIMIT: $6, 500 • TAX TREATMENT: • SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • NOT SUBJECT TO FEDERAL INCOME TAX WITHHOLDING 25

IRC § 403(B) • TAX-SHELTERED ANNUITIES FOR PUBLIC SCHOOLS, TAX-EXEMPT CHARITABLE, RELIGIOUS, AND EDUCATIONAL ORGANIZATIONS • AUTOMATIC SALARY REDUCTIONS WITHOUT AN EMPLOYEE ELECTION IS ALLOWED • SPECIAL PROVISION FOR EMPLOYEES WITH 15 YEARS OF SERVICE • $3, 000 IN ADDITIONAL CONTRIBUTIONS IN ANY YEAR • $15, 000 REDUCED BY ANY AMOUNTS CONTRIBUTED UNDER THIS SPECIAL PROVISION IN EARLIER YEARS • ($5, 000 X THE NUMBER OF YEARS OF SERVICE ) – TOTAL ELECTIVE DEFERRAL FROM PREVIOUS YEARS 26

IRC § 403(B) • ROTH OPTION AVAILABLE • POST TAX DEDUCTION • CATCH-UP CONTRIBUTION AVAILABLE FOR ROTH • PRE-TAX CONTRIBUTIONS AND POST-TAX CONTRIBUTIONS CANNOT EXCEED LIMITS • W-2 REPORTING – SALARY REDUCTION: • BOX 12, CODE E • W-2 REPORTING – ROTH: • BOX 12, CODE BB 27

IRC § 403(B) • ANNUAL COMPENSATION LIMIT: $285, 000 • ANNUAL CONTRIBUTION LIMIT: $19, 500 • CATCH-UP CONTRIBUTION: • EMPLOYEES AGE 50 OR MORE • ANNUAL LIMIT: $6, 500 • TAX TREATMENT: • SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • NOT SUBJECT TO FEDERAL INCOME TAX WITHHOLDING 28

IRC § 457(B) • DEFERRED COMPENSATION PLANS FOR THE PUBLIC SECTION AND TAXEXEMPT GROUPS • IRC ALLOWS FOR PLANS TO BE PROVIDED IN A DISCRIMINATORY MANNER • SPECIAL RULE WHEN NEAR RETIREMENT • FOR THE LAST 3 YEARS BEFORE THE PARTICIPANT REACHES THE PLAN’S NORMAL RETIREMENT AGE, THE MAXIMUM ANNUAL DEFERRAL LIMIT IS THE LESSER OF 2 TIMES THE AMOUNT DETERMINED BY THE FOR THE PARTICIPANTS ANNUAL DEFERRAL LIMIT OR THE CURRENT YEAR DEFERRAL LIMIT PLUS THE LIMITS FROM PREVIOUS YEARS REDUCED BY THE PARTICIPANT’S DEFERRALS FOR THOSE YEARS 29

IRC § 457(B) • ROTH OPTION AVAILABLE • POST TAX DEDUCTION • CATCH-UP CONTRIBUTION AVAILABLE FOR ROTH • PRE-TAX CONTRIBUTIONS AND POST-TAX CONTRIBUTIONS CANNOT EXCEED LIMITS • W-2 REPORTING – SALARY REDUCTION: • BOX 12, CODE G • W-2 REPORTING – ROTH: • BOX 12, CODE EE 30

IRC § 457(B) • ANNUAL COMPENSATION LIMIT: $285, 000 • ANNUAL CONTRIBUTION LIMIT: $19, 500 • CATCH-UP CONTRIBUTION: • EMPLOYEES AGE 50 OR MORE • ANNUAL LIMIT: $6, 500 • TAX TREATMENT: • SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • NOT SUBJECT TO FEDERAL INCOME TAX WITHHOLDING 31

IRC § 501(C)(18)(D) • EMPLOYEE-FUNDED PLANS • ANNUAL CONTRIBUTION LIMIT: LESSER OF $7, 000 OR 25% OF EMPLOYEE’S ANNUAL COMPENSATION • EMPLOYEE CONTRIBUTIONS ARE REDUCED BY OTHER CODA MAINTAINED BY THE EMPLOYER • W-2 REPORTING – SALARY REDUCTION: • BOX 12, CODE H 32

INDIVIDUAL RETIREMENT ACCOUNTS (IRA) • EMPLOYER-SPONSORED PLANS • ANNUAL CONTRIBUTION LIMIT: $6, 000 • CATCH-UP CONTRIBUTION: • EMPLOYEES AGE 50 OR MORE • ANNUAL LIMIT: $1, 000 • EMPLOYEE CONTRIBUTIONS AND COMPENSATION LIMITS ARE REDUCED BY OTHER CODA MAINTAINED BY THE EMPLOYER • CONTRIBUTIONS ALLOWED UP TO AMOUNT EMPLOYER BELIEVES THE EMPLOYEE CAN DEDUCT ON THEIR PERSONAL TAX RETURN • ROTH OPTION AVAILABLE 33

IRC § 408(K) • SIMPLIFIED EMPLOYEE PENSIONS (SEP) • FOR EMPLOYERS WHO DO NOT HAVE THE MEANS TO SPONSOR OR ADMINISTER A QUALIFIED PENSION OR PROFIT-SHARING PLAN • NO ROTH OPTION AVAILABLE • W-2 REPORTING – SALARY REDUCTION: • BOX 12, CODE F 34

IRC § 408(K) • ANNUAL COMPENSATION LIMIT: $285, 000 • ANNUAL CONTRIBUTION LIMIT: $19, 500 • CATCH-UP CONTRIBUTION: • EMPLOYEES AGE 50 OR MORE • ANNUAL LIMIT: $6, 500 • TAX TREATMENT: • SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • NOT SUBJECT TO FEDERAL INCOME TAX WITHHOLDING 35

SIMPLE PLANS • SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS • EITHER AN IRS OR PART OF A § 401(K) CODA • ANNUAL COMPENSATION LIMIT: $285, 000 • ANNUAL CONTRIBUTION LIMIT: $13, 500 • TAX TREATMENT: • SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • NOT SUBJECT TO FEDERAL INCOME TAX WITHHOLDING • W-2 REPORTING – SALARY REDUCTION: • CODA: BOX 12, CODE D • IRA: BOX 12, CODE S 36

EMPLOYEE STOCK OWNERSHIP PLANS • ESOP IS A STOCK BONUS PLAN OR COMBINED STOCK BONUS AND MONEY PURCHASE PLAN DESIGNED TO INVEST PRIMARILY IN THE EMPLOYER’S STOCK. • MUST MEET THE GENERAL REQUIREMENTS UNDER IRC § 401(A) REGARDING PARTICIPATION, VESTING, NONDISCRIMINATION, ETC. • EMPLOYER CONTRIBUTIONS NOT CONSIDERED WAGES AS LONG AS THEY ANNUAL COMPENSATION LIMITS OR CONTRIBUTION LIMITS ARE NOT EXCEEDED (REFER TO IRC § 401(A)) • NONLEVERAGED ESOP: BUYS STOCK EITHER WITH FUNDS PROVIDED BY EMPLOYER • LEVERAGED ESOP: BORROWED FUNDS 37

IRC § 409 A • NONQUALIFIED DEFERRED COMPENSATION PLANS (NQDC) • DOES NOT MEET IRC § 401(A) REQUIREMENTS FOR DEFERRED COMPENSATION • W-2 REPORTING REQUIREMENTS ARE ON HOLD FOR BOX 12, CODE Y AND CODE Z • EITHER FUNDED (DEFERRAL IS PROTECTED BY TRUST MONEY) OR UNFUNDED (PROMISE OF MONIES) • AMOUNT DEFERRED TAX TREATMENT: • NOT SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT TIME OF DEFERRAL • SUBJECT TO SOCIAL SECURITY, MEDICARE, AND FUTA TAXES • AMOUNT RECEIVED FROM DISTRIBUTION: 38

DO YOU KNOW? ? ? • WHAT ARE THE ADVANTAGES OF PRE-TAX BENEFIT CONTRIBUTIONS? • HIGHER TAKE HOME PAY • WHAT IS THE ANNUAL COMPENSATION LIMIT FOR IRC § 401(K)? • $285, 000 • WHAT ARE THE CHARACTERISTIC OF A DEFINED CONTRIBUTION PLAN? • AMOUNT CONTRIBUTED IS A SET AMOUNT • NAME 3 EXAMPLES OF A QUALIFYING EVENT THAT ALLOWS AN EMPLOYEE TO CHANGE THEIR ELECTIONS IN A CAFETERIA PLAN? • CHANGE TO MARITAL STATUS • BIRTH OR ADOPTION OF DEPENDENT • EMPLOYMENT STATUS CHANGE • WHAT LEGISLATION GUARANTEES EMPLOYEES THE RIGHT FOR UNPAID LEAVE TO CARE FOR NEWBORN? • FAMILY MEDICAL LEAVE ACT (FMLA) 39