The Benefit: SUB-Pay Plans help to convert taxable severance into a more tax-efficient benefit—potentially reducing both employer and employee payroll taxes while preserving 100% of pre-displacement wages.

Get an in-depth look at SUB-Pay Plans and discover if they align with your organizational objectives to help deliver meaningful savings:

• Tax-Efficient Design: How reclassifying severance as SUB-Pay exempts payments from FICA, FUTA, and SUI taxation for both employer and employee.
• Seamless SUI Integration: Best practices for linking payments to state unemployment benefits, including re-employment bonuses and duration extensions.
• Plan Requirements & Compliance: Navigating written plan standards, nondiscrimination rules, and state notification/approval processes.
• More Simplified Administration: Leveraging third-party administrators for plan document drafting, state filings, payroll file exchanges, and participant support.
• Mitigating Audit Risks: Identifying common pitfalls—like improper lump-sum distributions—and helping ensure ongoing eligibility verification to maintain tax exemptions.

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