Employee Retirement Gifts
Title:
Employee Retirement Gifts Policy
Effective Date:
July 1, 2018
Responsible Office:
Financial Operations
Last Updated:
First Version
I. Scope
This policy applies to all retiring employees of William & Mary, including the Virginia Institute of Marine Science (hereafter referred to as “the university”). For purposes of this policy an eligible employee shall be defined in accordance with the employee’s related retirement plan.
II. Purpose
The purpose of this policy is to provide guidance on recognizing employees at the time of their retirement for their performance of duties and length of service to the university and to establish parameters under which retirement gifts are recognized as a qualified plan award. Establishment of this policy does not require that such gifts be given to a retiring employee.
III. Definitions
- An Employee Achievement Award is an item of tangible personal property which is (1) transferred to an employee for length of service achievement or safety achievement, (2) awarded as part of a meaningful presentation, and (3) awarded under conditions and circumstances that do not create a significant likelihood of the payment of disguised compensation.[1] Retirement gifts are considered an Employee Achievement Award under the Internal Revenue Code.
- Tangible Personal Property is a physical item that does not include cash, cash equivalents, gift cards, gift coupons, or gift certificates (other than arrangements conferring only the right to select and receive tangible personal property from a limited assortment of items preselected or preapproved by the employer). Also excluded are vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, other securities, and other similar items.[2]
- Meaningful Presentation – A ceremonious observance recognizing the employee’s length of service. The presentation does not need to be elaborate, however, all facts and circumstances will be evaluated to determine whether the award was presented as part of a meaningful presentation.
- Disguised Compensation – An award will be considered disguised compensation if the conditions and circumstances surrounding the award create a significant likelihood that it is payment of compensation. Such conditions and circumstances would include making employee achievement awards (1) at the time of annual salary adjustments, (2) that are grossly disproportionate to the fair market value of the item, and (3) in a manner that discriminates in favor of highly compensated employees.
- Qualified Plan Award – An employee achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits.[3]
IV. Policy
A dean, department head, director or individual representing the university in an official capacity, may provide a nontaxable retirement gift of tangible personal property, as defined in section III, which does not exceed $600, to any one employee in recognition of the employee's retirement from the university. Retirement gifts of tangible personal property can only be purchased with Local Funds.
In adherence with the Internal Revenue Service’s qualified plan regulations and to ensure equitable treatment of all employees, the retirement gift policy will be followed by all departments. Awards will not exceed the amounts provided below:
|
Length of Service |
Maximum Amount |
|---|---|
|
5 to 10 years |
$150 |
|
11 to 15 years |
$300 |
|
16 to 20 years |
$450 |
|
Over 20 years of service |
$600 |
Length of Service will be determined using an effective date of December 31. For example, an employee who retirees in June 2018 with a hire date in July 2000 will have served 17 years based on an effective date of December 31, 2017, and would therefore be eligible to receive a retirement gift with a value up to $450 at the time of retirement.
For the purpose of this policy, full-time employment with the university is cumulative. If an employee who is in a full-time benefit-eligible position leaves the university and is later re-employed in a full-time benefit-eligible position, the length of both periods of employment shall be added together in order to the length of service. Prior service in part-time or student positions, as well as an unpaid leave of absence, will not be included when determining length of service. For teaching personnel and officials of academic rank, only those years during which the employee was considered full-time by the university for not less than the equivalent of two full semesters, including sabbatical leave and residency programs, will be included when determining length of service.
V. Approval & Amendment
- This policy was created by Offices of Finance and Human Resources effective July 1, 2018, and may be amended or terminated by the Senior Vice President of Finance and Administration.
- Questions about the implementation of this policy or its interpretation should be directed to the Vice President for Finance and Chief Financial Officer.
[1] 26 U.S. Code § 274 - Disallowance of certain entertainment, etc., expenses
[2] Ibid.
[3] Ibid.
