Home / Articles / Avoid the year-end vacation-time scramble

Avoid the year-end vacation-time scramble

December 23, 2013

Share:

Every December are your employees scrambling to use up their vacation time because of limits on what they can roll over to the new year? Or do you allow rollovers and have long-time employees who’ve built up large balances that create a significant liability on your books? Then you may want to consider a paid time off (PTO) contribution arrangement that allows employees with unused vacation hours to elect to convert them to retirement plan contributions.

If the plan has a 401(k) feature, it can treat these amounts as a pretax benefit, similar to normal employee deferrals. Alternatively, the plan can treat the amounts as employer profit sharing, converting the excess PTO amounts to employer contributions.

If you’d like to offer this option, you simply need to amend your plan. However, you must still follow the plan document’s eligibility, vesting, rollover, distribution and loan terms, and additional rules apply. Please contact us for more information on the ins and outs.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

Guidance

Related Articles

Article

2 Min Read

Supply chain software can help digitize the dilemma

Article

2 Min Read

Oversight and controls are key to limiting fraud in nonprofits

Article

2 Min Read

Standard business mileage rate will increase for the second half of 2022

Article

2 Min Read

Proposed regulations for inherited IRAs bring unwelcome surprises

Article

2 Min Read

Get your piece of the depreciation pie now with a cost segregation study

Article

2 Min Read

Navigating the New Data Privacy Landscape

Get in Touch.

What service are you looking for? We'll match you with an experienced advisor, who will help you find an effective and sustainable solution.
  • Hidden
  • This field is for validation purposes and should be left unchanged.