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Implementing a bonus program for achieving safety goals can help raise awareness of your safety program and increase compliance.
Employees who receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement can generally exclude these items from income. However, the excludable amount cannot exceed $1,600 ($400 for awards that are not qualified plan awards) for all such awards received during the year.
Implementing a bonus program for achieving safety goals can help raise awareness of your safety program and increase compliance. Employees who receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement can generally exclude these items from income. However, the excludable amount cannot exceed $1,600 ($400 for awards that are not qualified plan awards) for all such awards received during the year.
To meet the definition of a “qualified plan award,” the employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. The exclusion does not apply to the following awards:
- Length-of-service awards for less than five years of service or for employees who have received another length-of-service award during the year or the previous four years.
- Safety achievement awards for managers, administrators, clerical employees or other professional employees.
- Safety achievement awards, if received by more than 10 percent of eligible employees during the year.
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