Purchase Vacation Time in Flexible Benefit Plan

[Guest Todd Lehmann]

My client would like to allow their employees the option of purchasing up to seven days of additional vacation time, pre-tax as a benefit in their flexible benefits plan. Is this form of benefit allowed? And can an employee purchase the time on a pre-tax basis? Does the plan document need to be amended to add a pre-tax vacation benefit?

[Joe Priselac]

Todd,

Yes, yes and yes.

[QDROphile]

How does one "buy" vacation time pre-tax and why is that better than having unpaid vacation time?

[Guest Matt J]

You also cannot have a vacation "rollover" from year to year when the vacation buy policy is pre-tax. It must be used or paid out in the same tax year.