What is a Qualified achievement award plan?
A qualified achievement award plan is a written employer program that provides tangible personal property awards to employees for length of service or safety achievements while meeting specific IRS requirements under IRC Section 274(j). These plans allow employers to deduct up to $1,600 per employee annually for qualifying awards, compared to the $400 limit for non-qualified plans. The written plan must not discriminate in favor of highly compensated employees and must establish objective criteria for earning awards. Qualifying achievements include length of service recognition after five years of employment (and no more frequently than every five years), as well as safety awards given to 10% or fewer eligible employees, excluding managers and professional staff. Awards must be tangible personal property presented in a meaningful ceremony emphasizing the achievement. Businesses can maximize recognition value while maintaining tax efficiency through Employee achievement awards and Instead's comprehensive platform that automates compliance tracking and documentation requirements.
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