There are special employee benefit issues for nonprofit employers. In addition to the benefits that all employers may provide, there are employee benefit plans that are available only to nonprofit employers and special rules, exceptions and restrictions that apply only to nonprofit employers. As a result, it is critical to work with attorneys who are experts both with respect to employee benefits, in general, and to the special rules for nonprofit employers. Reinhart attorneys are experienced and knowledgeable in this area.
The type of plans that are available and the rules that apply will depend on the type of nonprofit employer. For example, a nonprofit employer that is described under section 501(c)(3) of the Internal Revenue Code may sponsor a tax-deferred annuity. This is a special type of retirement benefit, with its own set of tax rules, which may be provided on an individual basis or as an employer group plan. This benefit is not available to other types of nonprofit employers.
There are special rules and exceptions that apply to retirement plans and health plans (and the administration of those plans) maintained by a church or a church-related organization. These employers have the option of using the special rules and exceptions or complying with the rules for qualified retirement plans and health plans that apply to for-profit employers. Determining which employers may maintain church plans and the special rules and exceptions that apply is a specialized area of employee benefits law.
One particularly important issue for nonprofit employers concerns deferred compensation plans and arrangements, benefits which are typically provided for top-level employees in an organization. This is another area in which the requirements for nonprofit and for-profit employers are different. There is an entire set of separate requirements for nonprofit employers. However, nonprofit employers must also comply with the new restrictive rules for deferred compensation, which apply to for-profit employers. Because there are severe tax consequences for noncompliance, it is critical that nonprofit employers understand and comply with all of the rules.
Employee benefits is a complex field, and the special rules for nonprofit employers add another level of complexity. There is no substitute for working with attorneys who have the depth of knowledge and experience that nonprofit employers need.