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Profit Plus Plan ??

Discussion in 'The Lounge' started by jarheadk5, Oct 2, 2006.

  1. jarheadk5

    jarheadk5 1/2 ton status

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    Had an interview today with a helicopter company. Part of the benefits package is something called the "Profit Plus Plan". Basically you get 2 paychecks - one for your time, and one for your tools. Time check is taxed, tools check is not. Everything I've found on a brief Google search is either from the company that administers the plan, or a 'zine article from various industry-insider magazines. They all say the IRS is on-board with the plan and has no issues with it - in other words, it's legal and I won't get whacked for tax evasion.

    Anybody else heard of this? Anybody on the plan? Feedback is appreciated...
     
  2. jarheadk5

    jarheadk5 1/2 ton status

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  3. jarheadk5

    jarheadk5 1/2 ton status

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    I take it from the crickets residing in this thread that no one's ever heard of this...
     
  4. cbbr

    cbbr 1 ton status GMOTM Winner

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    We see a lot of this where I work (Workers' Comp insurer). The down side is that we consider the "tool payment" to be part of remuneration (basically pay) and charge a premium based on that. Lots of oil companies try to get away "renting" tools from their employees. The companies end up with a large bill and the worker's with no comp coverage.

    I have no idea how the IRS looks at it, but I would talk to a CPA or Tax attorney to make sure that you are in the clear.
     
  5. Fubeca

    Fubeca 1/2 ton status

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    It looks like an accountable plan (like a Flexible spending health plan, or a transit plan). Basically the plan allows you to have a certain amount deducted from each paycheck pre-tax and then you submit for reimbursement for your costs.

    They are basically saying - you are paid $1000 a week, but we'll say you are deducting $200 a week and placing it in an tool reimbursement plan. They then pay you $800 and "reimburse" you $200 so you only pay taxes on the $800.

    I would make sure you understand how the reimbursement works - you need to know if you will need to buy new tools, you need to know the value of your current tools, and how long they will spread that out. In one of the examples you posted - they spread it out over 5 years.

    As long as you are actually being reimbursed for costs you incurred the IRS isn't going to have any issues. If they are selling this as a part of your total comp, you need to watch out. Most accountable plans let you decide how much to put into the plan each year. So you would never be locked in for more than a year - but I wouldn't take a lower salary because of this plan.
     
  6. cbbr

    cbbr 1 ton status GMOTM Winner

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    If that is the setup, don't you have to supply reciepts for the tools actually bought to claim the cost amount or lose it at the end of the year?
     
  7. Fubeca

    Fubeca 1/2 ton status

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    Often they won't require a receipt, just a signed statement that the costs are legit. Also, many plans, other than flex spending (although some of them are starting) just roll over unclaimed amounts to the next year.
     
  8. cbbr

    cbbr 1 ton status GMOTM Winner

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    My flex spending administrator (childcare and medical) requires receipts and its "use it or lose it" Its OK with the child care because you know what you will be spending, but I never get to take full advantage of the medical part because you can't guarantee that someone will get sick.
     
  9. jarheadk5

    jarheadk5 1/2 ton status

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    Finally! I was starting to wonder if I'd offended someone somewhere on CK5...

    Thanks for the info. Dunno if I got the job yet; dunno if this plan will still be offered next year (when the company switches to the parent corporation's bennies package). Good food for thought...
     
  10. sled_dog

    sled_dog 1 ton status

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    A buddy of mine has that at the shop he works at out in Ohio. Someone came out and valued his tools and they even included tools he had at home, like his MIG welder and various other things(home here in Bucks county I mean). He loves the program.
     
  11. Fubeca

    Fubeca 1/2 ton status

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    Cbbr - Congress just passed a law that allows companies to amend their flex spending plans to allow for roll over of unused funds (about freakin time!). Few companies have made any changes yet - I hope to see it soon at my company. Some other plans like transit and parking often don't require receipts and allow carryforward of unused amounts. The tool plan might be like that - or it might not, I don't know.

    Jarheadk5 - I just don't think hardly anyone knows anything about this stuff - it isn't that common. Keep us posted :)
     
  12. cbbr

    cbbr 1 ton status GMOTM Winner

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    Cool. I didn't know that. It would be great if they would change that in my company. I could really maximize th benefit if I could get rid of some of the guesswork.
     
  13. Fubeca

    Fubeca 1/2 ton status

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    BTW - I just looked this up. They didn't finish this. Congress never passed it. The IRS did relax the rules to allow a company to amend their plan rules and give a 2.5 month extension for flex spending accounts. A little better - but still not fixed. :(
     

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