Are retirement incentives in lieu of health benefits reportable? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Are retirement incentives in lieu of health benefits reportable?

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in Office Management,Payroll Management

Question: Employees have three retirement incentives from which to choose: The company picks up their health benefit contributions for three years, they can take a lump-sum payment that equals our single premium rate for up to three years or they can keep their current health benefits and get a prorated cash payout. What’s reportable on their W-2s?

Answer: For employees who choose the first option or the health benefits portion of the third option, nothing is reportable, since it’s still employer-provided health insurance. Cash is always taxable and reportable, so that takes care of option two and the second half of option three.

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