Showing posts with label Reasonable retirement Benefit Plan; Republic Act No. 4917. Show all posts
Showing posts with label Reasonable retirement Benefit Plan; Republic Act No. 4917. Show all posts

Saturday, July 26, 2014

Requisites of a Reasonable Retirement Benefit Plan

The requisites of a reasonable retirement benefit plan include the following:

1. It must be a definite written program setting forth all provisions essential for qualifications;
2. it must be permanent and continuing program unless sooner terminated by virtue of a valid business reason;
3. It must cover at least 70% of all officials and employees.
4. It must provide for the non-diversion of the corpus.
5. It must not provide for discrimination in contributions or benefits in favor of officials and employees who are officers, shareholders, supervisors or highly compensated officers;

Under Republic Act No. 4917, retirement benefits received by employees of private firms in accordance with a reasonable private benefit plan maintained by the employer are exempt from all taxes, provided that the retiring employees has been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of hi retirement.