The Seaman & Co., Inc. POP Program

2006 Renewal

When we talk about the SEAMAN & CO. POP, we aren’t talking about good “ole dad”, some snap crackle cereal, or even a soft drink. We are speaking about a valuable way to effortlessly convert your employee’s contributions towards health and benefit premiums into a pre-tax modification to your payroll.

The SEAMAN & CO. POP, or Premium Only Plan, is an IRS approved way for you and your employees to save money by cutting down on payroll taxes. The SEAMAN & CO. POP is an easy way to reduce your FICA expense and Seaman & Co., Inc. makes the SEAMAN & CO. POP easy to launch.

By initiating the SEAMAN & CO. POP, you save the 7.65% FICA contribution you make for your employees. Your company also saves on worker’s comp, state and federal unemployment taxes. The average employee saves about 28% of every dollar they pay towards premiums. This is a truly win-win situation.

What are the advantages and disadvantages to a POP:

Advantages:

1. Employees don’t pay FICA, Federal or State taxes.

2. Employee’s take-home pay will typically increase.

3. The increase in pay can help employee’s pay for their share of medical, dental, vision, chiropractic and/or chiropractic & acupuncture premiums.

4. You get credit for increasing benefits but actually save money because you don’t have to pay FICA on applicable premiums.

5. Starting a POP plan takes just one elementary adjustment to your payroll.

6. Seaman & Co., Inc. will create the necessary paperwork – the Plan Document and Summary Plan Description (SPD is a fancy government term for booklet) and set up the plan at no charge to you or your employees.

7. The Plan Document and SPD may need to be updated as new regulations come out. Seaman & Co., Inc. offers to do this at no charge.

Disadvantages:

1. The IRS does not allow all premiums to be deducted pre-tax; for example, universal life insurance and products which have a “return of premium” clause cannot come under a POP plan since they defer income.

The employee’s contribution to FICA taxes will be reduced; however, any increase in income can be saved by the employee at a much higher rate of return than the employee would receive from Social Security after retirement.

Who can set up one of the SEAMAN & CO. POP plans?

Any type of company can start a POP plan for its employees; however, it is important to be aware that the IRS does not currently allow the owners (2% or more) of S-corporations, LLC’s, partnerships, sole proprietorships or PC’s to participate but their other employees can. Owners cannot get around this regulation by running premiums through their “employee” spouse. Since the owners still do not pay FICA taxes for the other employees, the SEAMAN & CO. POP is still a great plan. A POP plan can also be started at any time of the year.