Question

. What is a fringe benefit? Can it be made a part of an employee benefit plan?

Answer 1

Fringe benefits are additional compensation provided to employees above and beyond an agreed-upon wage or salary. Besides helping employees, offering fringe benefits helps employers tremendously from a recruiting perspective. Among similarly focused companies, employers can find it challenging to attract desired talent based on salary alone. By offering fringe benefits, especially those not available through a competitor, an employer stands a greater chance of attracting the level of talent it needs or wants.

Fringe benefits are generally tax-exempt, as long as certain conditions are met. Recipients of taxable fringe benefits have to include the fair market value of the benefit in their taxable income for the year.