US employers who pay severance benefits may realize substantial savings by structuring their severance payments under a Supplemental Unemployment Benefit (SUB) plan. A SUB plan provides benefits similar to a traditional severance plan. Unlike traditional severance payments, benefits under a SUB plan are tied to the former employee’s receipt of state unemployment insurance (SUI) benefits and, generally, do not reduce the former employee’s SUI benefits compared to traditional severance plan benefits, which generally reduce the former employee’s SUI benefits. An added benefit is that SUB plan payments are exempt from FICA and FUTA taxes. Learn more about a SUB Plan option here. Please contact us to see how we can assist in the design and implementation of a SUB plan.
