Reducing Severance Cost

You may be paying up to twice as much as you need to for severance benefits.

Many companies are unfamiliar with the Supplemental Unemployment Benefit (SUB) Plan and Trust, which eliminates FICA taxes on most severance payments. In addition, companies are double-paying displaced workers when they pay 100 percent of previous compensation through severance benefits to those who are lucky enough to live in states with generous unemployment benefits, which are funded by the company. Finally, because many companies are unable to track the employment status of displaced workers, the severance benefit provided by the company often exceeds the amount necessary to provide income replacement during the period of unemployment.