My Secure Advantage

Do you have tax-advantaged benefits you don’t know about?

Many of us want to make sure that we are maximizing the benefits offered by our employers. But we may also have benefits that we are not aware of.
By MSA Staff

Many of us want to make sure that we are maximizing the benefits offered by our employers. But we may also have benefits that we are not aware of.  Take a look to see if these apply to you.

401(k) or 403(b) Matching

If you don’t take full advantage of your company’s programs, you might be giving up money from your employer. MSA is here to guide you through this process of saving for your retirement and life’s big events.  We can help you to understand how you might maximize your benefits and secure your future.

Let’s see how this works. Remember, pre-tax 401(k) and 403(b) contributions aren’t taxed as current income, and the money grows tax-deferred.  Let’s say that your employer offers a deal that looks like this: they will contribute one-for-one up to 6%.  That means that if you contribute 6% of your salary to one of these retirement plans, your employer will contribute the same amount in addition to yours.  In other words, your 6% contribution turns into a 12% contribution.  If you look at it another way, you just got a 6% raise going into your retirement account.

HSAs (Health Savings Accounts)

An HSA allows you to make tax-deductible contributions each year to pay for current and future healthcare costs. The HSA plan may be funded by contributions from your employer, from you, or from both. Your employer may have a matching option, as well.  If your employer offers an HSA, it typically works like a 401(k)/403(b) contribution that is taken out of your paycheck on a pre-tax basis.

Employer contributions aren’t included in your income, and distributions from an HSA that are used to pay for qualified medical expenses aren’t taxed.

Educational Stipend

Many companies offer to cover certain educational expenses.  Employers are allowed to provide up to the IRS limit for educational expenses as a tax-free benefit to employees.  Anything above that amount is generally considered as taxable income.  Your employer may put a cap on the total payments or restrict some education, courses, or degrees that will only benefit your work at their firm. It may seem self-serving because they are building a better-trained workforce, but for you, you could be getting a lower-cost or paid-for education that you will have for a lifetime.

Your Health & Wellness

Many companies offer wellness programs in the form of on-site gyms, discounts at gyms, or incentives to join programs.  There are also more and more employers that offer wellness programs that work in conjunction with their health insurance providers.  There are many ways that this can be offered.  One way, for instance, is in the form of a smartphone application that will indicate wellness steps that you take (literally) and wellness visits to doctors. Some employers issue exercise-tracking devices and the option to join exercise work groups. When you participate, you may be able to earn points for sharing the information with your employer.  You could even be rewarded for taking care of your own health since some employers may offer a cash gift. Plus, wellness programs are tax-free for employees.

Look at Your Partner’s Health Plan

If you live with a working partner, don’t assume that the person with a fancier job has a better healthcare plan.  Really examine the plans and decide which is best for you both or individually. Make sure that you understand the options available and consider not just how much you might pay in premiums but also your out-of-pocket maximums for the year.  Avoid surprises by paying attention to which providers are available in-network to avoid higher out-of-network costs.

Free or Discounted Products

Many manufacturing, retail, or software companies offer employees free products.  Many employers provide discounts or special deals on gym memberships, cell phone plans, magazine subscriptions, shopping deals, etc. Consider taking advantage of these offers that could save you a lot of money.

Public Transportation or Parking Passes

Many urban companies offer free or reduced-cost passes on city mass transit.  This could save you lots of money.  Also, if you need to drive to work, you may get parking permits.  If you carpool and have these permits, you might be able to greatly reduce your commuting costs. There is no income tax liability if the parking is workplace parking and the value of the parking is below the IRS-stated monthly limit.

High-Risk Job Disability Insurance

Some employers offer disability insurance for employees who take higher risks in their job or simply want protection against loss of wages.  If this is applicable to your job, it’s worth looking into.

Child Care

A hidden benefit that can save you money is child care.  Many large employers offer an on-site center where kids can be dropped off at the start of the work day and picked up at the end of work. Others may offer off-site arrangements with local daycare at a reduced rate.

Childcare vouchers are an employee benefit that is tax-exempt up to specified limits.  Check those out.

How do you know if your employer offers any of these perks?

Dust off that pile of pamphlets you were handed on your first day of work.  There will be an employee manual.  Or you can speak to someone in Human Resources and describe your situation. Make sure you know what is offered and if there are any taxable considerations for you.

About the Author

Neale Godfrey is a New York Times #1 Best Selling Author of 27 books on empowering families (and their kids) to take charge of their financial lives.

Information provided in this article is for informational purposes only and is not intended to offer specific personalized investment, financial planning, tax, legal, or accounting advice.  We recommend that you consult an attorney, tax advisor, or accountant regarding your unique circumstances.

Employer matching contributions may be subject to a vesting schedule that can reduce or eliminate employee access to employer contributions if they leave the employer within a certain timeframe.  See your Plan Document or speak with your Plan Administrator to understand your employer matching contributions.

My Secure Advantage, Inc. or any of its representatives do not endorse any of the websites or company names listed here.

Facebook ShareTweetReddit shareLinkedIn shareEmail share

More Like This

Do you want a responsible tax professional who will do your taxes correctly and efficiently?  Listed below are action steps and types of qualified tax preparers worth considering as you search for help with taxes. Know your tax preparer is trustworthy because even though they prepare your tax return, you’re still legally responsible for the […]

Trends & News

In any new year, most people gather their paperwork and file their taxes, then forget about it until the next tax season. While you get organized, consider whether you have opportunities to lower the taxes you will pay next year. In this Trending Topics segment, Money Coaches discuss a few strategies for how you might do this.

Questions & Answers

Did you know that serious debt problems plague 32% of Americans?  Do you feel like you may be part of that 32%?  Consider the following questions to find out. Do you have trouble meeting minimum payments? Do you live paycheck to paycheck? Do you often use credit cards to buy items you can’t afford in […]

COVID-19

Now that unemployment benefits have changed yet again, how do you move forward? Life vs. Livelihood These issues are complex.  Most of us have never been in a situation in which we have to decide whether the risk of exposure to illness outweighs the potential economic damage.  None of us wants to see the economy […]