Financial Benefits: What You Need to Know

Why don’t cows have any money? Because farmers milk them dry! That’s funny, but I’m sure you don’t find it funny if you are feeling ‘milked dry’ by high costs for groceries, gasoline, and other daily expenses. Who’s here to save the day? Me, of course, and possibly your employer, too. How? With employer-sponsored financial benefits. These can be game-changers, and I’ve got everything you need to know!

Traditional Financial Benefits

Do you have a profit-sharing plan or a 401K? These financial tools offer tax savings and help prepare you for a more comfortable retirement. However, they have annual contribution limits, early withdrawal penalties, and substantial regulation, which can be challenging for many employees to keep up with, even after they start contributing.

Creative Financial Benefits

I talk to employees like you daily and hear one common theme. You all need more employer support for mental, emotional, financial, and physical well-being. The good news is that many employers are offering various new/creative benefits. Check these out!

Tax-Advantaged CDH Accounts

Are you sick and tired of being sick and tired? Need help with everything from doctor visits to sleep aids? Tax-advantaged consumer-directed healthcare (CDH) accounts offer significant tax savings. You can save an average of 30% or more on funds you set aside for use in paying for eligible products and services.

Health Savings Accounts (HSAs) are one of these tax-saving tools. In addition to saving taxes on funds set aside to purchase eligible products and services, unused funds roll over annually and earn tax-free interest and returns (if invested). According to the 2023 Midyear Devenir HSA Research Report, HSA investment assets grew 20% year over year. However, only about 7% of all account owners invest at least part of their unused balance.

Lifestyle Spending Accounts (LSAs)

Many of us have felt very stressed over the last few years. Does a massage sound great to you? Dream on, you say? Lifestyle Spending Accounts (LSAs) are the newest and most creative benefit. Your employer funds them. Eligible expenses are up to your employer and can cover just about anything, such as financial products and services like:

• Estate planning
• Financial advisors
• Financial seminars
• Budgeting classes and apps

And other expenses, perhaps even massages! But remember that you are liable for taxes on any amounts received.

Emergency Savings Accounts

Why did the piggy bank go to the gym? Because it wanted to build some “financial muscles.” If only it were that easy!

Recent studies show that emergency savings accounts are among the most sought-after financial benefit programs. They are an easy way to build a rainy-day fund, as your employer can automatically direct a portion of your paycheck into these accounts. There are no tax benefits, but the accounts have no restrictions on how much you can save or when you can withdraw.

Student Loan Assistance Programs

The government offers a student loan forgiveness program with some limits. Your employer can also help by contributing up to $5,250 per year towards your student loan, and it’s tax-free for you until 2025.

Let’s wrap it up!

Whether you’re feeling ‘milked dry’ or are sick, tired, and stressed, employer-sponsored financial benefits can help provide relief. Even if enrollment is not currently open, you may still be able to enroll with some requirements. To learn more, consider subscribing to my blog or following me on Facebook and X (formerly Twitter).