Page 257 - Washington Nonprofit Handbook 2018 Edition

employees who do not provide another retirement plan and who do
not hire employees under lease agreements.

• Profit Sharing Plans: These plans provide for an annual employer
contribution in an amount determined by the employer. The amount
can vary and be determined each year depending on the employer’s
financial ability. The primary applicable tax qualification rules are set
forth in sections 401 and 415 of the Code.

• Money Purchase Defined Contributions Plans: These plans provide for
a stated employer contribution each year. Some plans are designed to
require employee contributions as well. Because of the annual
funding requirement and the emphasis on employer funding, these
plans are less common with nonprofit employers. The primary
applicable tax qualification rules are set forth in sections 401, 412, and
415 of the Code.

• Defined Benefit Pension Plans: Defined benefit plans provide a
retirement benefit expressed pursuant to a formula which takes into
consideration the employee’s compensation and years of service. The
annual funding for the future benefit is actuarially determined.
Defined benefit plans can be expensive to fund and administer, and
are not commonly offered by nonprofit employers. The primary
applicable tax qualification rules are set forth in sections 401, 412, and
415 of the Code.

c. Welfare and Fringe Benefits

Many employers offer benefit plans which, while not retirement benefit
plans, are subject to ERISA and/or the IRC. Examples of such plans are:

• Medical, dental and vision plans

• Health reimbursement and flexible spending accounts

• Disability insurance and group accident and sickness plans

• Long-term care insurance plans

• Housing assistance plans

• Volunteer Employee Beneficiary Associations

WASHINGTON NONPROFIT HANDBOOK -246- 2018