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Can donors give Sick Leave hours or other forms of leave?
Leave donated by employees for use in the Kiel Memorial Voluntary Vacation/PTO
Donation Program must be vacation or paid time off from the short term
bank (PTO STB). This program requirement reflects the design of similar
benefits programs at other institutions. Furthermore, stipulating that
the transfer of leave hours in this program must be vacation or PTO STB
allows the program to be structured as a payroll practice rather than a
funded benefit or program.
Can donors to the Vacation/PTO Donation
Program claim a tax deduction? Is the compensation received by recipients
taxable?
Employees who donate leave neither realize any income nor incur any
deductible expense or loss in connection with the donation. Donated leave
is treated as taxable compensation to the recipient.
Why is there no direct transfer of funds between the donor and recipient?
The Vacation/PTO Donation Program is modeled after the federal government's
leave transfer program created by the Federal Employee Leave Sharing Act
of 1988. The Department of Labor has indicated that leave share programs
similar to the federal government's "plain vanilla" leave share program
are unlikely to fall under ERISA guidelines. ERISA plans, briefly stated,
require annual reporting and plan assets must be held in trust. As long
as a leave sharing program is "unfunded", it is not an ERISA plan. Transfer
of actual funds and/or maintenance of a bank of "in kind" contributions,
measured in cash, would be characteristic of an ERISA program.
Does this program address maternity leave?
The Kiel program does not provide a benefit for pregnancy or maternity
leave. Benefits to provide time off for maternity leave may fall under
other programs such as the Family and Medical Leave Act.
How is additional paid leave funded?
Recipients of donated vacation/PTO are paid from their normal account
code(s). Funds are not transferred from the donor's account code to the
recipient's account code. The vacation/PTO donation program is a payroll
practice and not a funded benefit program.
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