AboutVanessa Powell Expertise I am experienced with general bookkeeping, payroll, journal entries, adjusting entries, all types of pension accounting, compliance issues, ERISA, benefit plan auditing, financial statements, payroll tax, Form 5500, retirement planning, and related issues.
Please no homework questions. Only US accounting, please.
Experience I am a CPA candidate and in the running for the Watt Sells award for 2010 (for top exam scorers.) I audit employee benefit plans for the large accounting firm I work for, as well as performing compilations, planning, and tax services.
Organizations California Society of CPAs.
Education/Credentials Graduated summa cum laude from Colorado Technical University. Our firm requires CPA continuing education for all staff accountants, whether licensed or not, so I take 80 hours of CPE every two years. Much of it in the field of accounting, auditing, and employee benefit plans.
Awards and Honors Graduated summa cum laude (with highest honor). Watt Sells candidate.
Past/Present Clients I have clients from all over the world, in nearly every industry. Most of my audit clients are employee benefit plans and not-for-profit entities. Most of my compilation engagements are manufacturing and restaurants.
Question It is my impression that federal law requires that employee benefits programs for any classification (exempt-salaried, non-exempt-salaried or hourly) be the same or at least equal in value for all employees at a specific employer/location. If this is in fact true, where can I find the specific rule or law?
Thank you!
Answer While it's a little more complicated than that, your basic premise is correct. ERISA (Employee Retirement Income Security Act of 1974) does dictate that there can be no discrimination between employees, regardless of pay. However, they can make it voluntary or based on compensation, at which point it's completely legal if someone gets more than someone else. For example, profit sharing is usually based on annual compensation, so someone who gets paid 200,000 per year is going to get a lot more than someone who gets paid 20,000 per year. And that is allowed. What isn't allowed is for there to be some kind of sliding scale based on position or pay level. For instance, it wouldn't be legal for salaried workers to get a 5% match in a 401(k) while hourly workers get 2.5% (or even vise versa- reverse discrimination is also not allowed.) Similarly, if highly-compensated employees are allowed to contribute to the Plan, then everyone else should be allowed to contribute as well- it's not just about the employer portion of a benefit plan.
Essentially, as long as everyone has the exact same opportunity, it's acceptable.
However, if the plan isn't qualified (meaning, it doesn't get special tax treatment), then, essentially, these discrimination rules don't apply- the company can (obviously, within reason) contribute and allow contributions in any way they choose.
