ADOPTION-FRIENDLY WORKPLACE EMPLOYER TOOLKIT

Our founder, Dave Thomas, started an initiative advocating for adoption benefits in the workplace more than 30 years ago. For him, it was simply a matter of equity — if an employer provides benefits for families because of the birth of a child, why wouldn’t they also acknowledge adoption? He began reaching out to other CEOs and suggested they offer adoption benefits because, as he shared with everyone, “It’s the right thing to do.”

Today, the Dave Thomas Foundation for Adoption continues this legacy by encouraging organizations to implement adoption and foster care benefits and providing a toolkit of resources to support organizations that are striving to become an adoption-friendly workplace.

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Best Adoption-Friendly Workplace Spotlight: Walmart

Julia, her husband and grandson

After the sudden loss of her daughter, Julia immediately filed for emergency custody over her grandson. As a store coach for Walmart, she discovered her organization’s adoption benefits program and leaned on it for support. Walmart, recognized on 100 Best Adoption-Friendly Workplaces list of 2023, proved their commitment to support employees by providing financial assistance and check-ins for Julia.

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ADOPTION BENEFITS – A National Overview

According to the Society for Human Resource Management’s (SHRM) 2023 Employee Benefits Survey, 34% of employers offer paid adoption leave, and 25% provide paid foster child leave. Many organizations that offer competitive paid leave for families who adopt also support foster parents through a limited paid leave benefit.

According to the 2024 Best Adoption-Friendly Workplace Survey the average:

  • Financial reimbursement for employees per adoption was $16,422
  • Paid leave employers provided for adoptive parents was 9.6 weeks
  • Paid leave employers provided for foster parents was 9.7 weeks

While these benefits are a relatively small investment for most organizations, they can have a life-changing impact for families and children waiting for a permanent home.

In fact, a study conducted by The Harris Poll on the Foundation’s behalf showed that 64% of Americans say that their employer’s assistance with adoption expenses impacts their decision to adopt. And 68% say paid leave for adoptive parents impacts their decision to expand their family through adoption.

How do employers benefit?


Employers are increasingly offering these benefits to:

  • Strengthen employee loyalty, goodwill and productivity
  • Provide time and support for employees to bond with their child(ren)
  • Gain a competitive edge in recruitment and retention
  • Make adoption more affordable
  • Enhance the organization’s family-friendly image
  • Help move youth waiting in foster care to safe, permanent homes
  • Recognize the need to support adoptive and foster parents
  • Be responsive to research that shows parental leave is critical to a child’s health

What is an adoption assistance program?


An Adoption Assistance Program is a voluntary employer-sponsored benefit that financially assists or reimburses employees for expenses related to the adoption of a child. This is a formal, written plan maintained by an employer.

The employer determines:

  • Whether the adoption assistance program will apply only to employees who finalize an adoption, or also to those with unsuccessful adoption efforts.
  • The amount of financial reimbursement available to eligible employees (see IRS Topic 607)
  • Employee eligibility requirements.

An adoption assistance program must meet the following requirements:

  • Benefit all eligible employees, not just “highly compensated” employees.
  • Pay no more than five percent of its benefits to shareholders or owners (or their spouses or dependents).
  • Give reasonable notice of the plan to eligible employees.
  • Provide reasonable substantiation that payments or reimbursements are for qualifying expenses.

Who is eligible for adoption benefits?


Many employers maintain the same eligibility requirements for adoption benefits as they do for maternity, paternity or other organization benefits. Most often, full- and part-time employees are eligible, and the effective date ranges from immediately upon hire to one year of service.

What adoption expenses are covered by financial reimbursement?


For the credit and exclusion, qualified adoption expenses include:

  • Reasonable and necessary adoption fees.
  • Court costs and attorney fees.
  • Travel expenses (including amounts spent on meals and lodging while away from home).
  • Other expenses that are directly related to, and for the principal purpose of, the legal adoption of an eligible child.

According to the IRS Topic 607, Adoption Credit and Adoption Assistance Programs, an adoption assistance program allows eligible employees to exclude from taxable income expenses paid or reimbursed by their employers on their behalf for qualifying adoption expenses. If all requirements are met, an individual may take advantage of the adoption tax credit and the income exclusion. However, the maximum dollar limit cannot be exceeded.

The employee may take the adoption tax credit and exclusion for the same adoption, but not for the same expenses. The employee can claim the adoption tax credit for expenses that have not been reimbursed by the employer.

The maximum amount of employer-provided adoption assistance that may be excluded from the employee’s income changes every year. The income exclusion begins to phase out for taxpayers with incomes in excess of a specified amount that also changes every year. Employees are encouraged to use a tax professional when they adopt.

What tax laws apply to adoption benefits?


Employers should refer to the current IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits, which states that financial adoption assistance is not subject to federal income tax withholding, but is subject to Social Security, Medicare and federal unemployment taxation. It should be reported in box 12 of the employee’s W-2, using code “T” to identify the amount.

Employees should refer to the current IRS Topic 607, Adoption Credit and Adoption Assistance Programs, regarding income exclusions and tax credits for qualified adoption expenses. Consult a personal tax advisor for details.

This summary is provided for informational purposes only and is not intended to replace the counsel of a professional tax advisor. For more information from the Internal Revenue Service, visit irs.gov.

What else can employers do to support foster and adoptive parents?

  • Connect employees with adoptive and foster parent networks or support groups.
  • Share resources for available grant programs (e.g., Ohio Adoption Grant Program).
  • Educate employees about adoption and foster care with workshops or lending libraries.
  • Understand that adoptive and foster parents may need a flexible work schedule to address times of transition.
  • Celebrate with showers and gifts when employees adopt just as you would celebrate employees welcoming birth children.
  • Invite a member of the Dave Thomas Foundation for Adoption to speak to your employees about foster care adoption.

Many states also offer a state adoption tax credit. Learn more about what is available in your state and discover other financial resources for adoptive families.

BEST ADOPTION-FRIENDLY WORKPLACE SPOTLIGHT: Bank of America

Felicia, an executive in the Expansion Markets Division at Bank of America, considered adoption for years. The opportunity finally presented itself when she and her partner, Ruth, were introduced to three sisters in need of a forever family. With the support of adoption benefits from Bank of America, Felicia and Ruth adopted the sisters and officially became a family.

“An important part of Bank of America’s commitment to be a Great Place to Work is providing benefits and resources that support our employees during moments that matter, like becoming a parent,” said Kate Phillips, Bank of America’s Head of Global Benefits.

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Felicia, Ruth and their daughters.

READY TO BECOME AN ADOPTION-FRIENDLY WORKPLACE?

Download the full toolkit to access a sample adoption assistance plan, news release, policy and more.

 

Download the Toolkit

Best Adoption-Friendly Workplace Survey

The 100 Best Adoption-Friendly Workplaces list recognizes organizations that are striving to make adoption a supported option for every working parent.

HR professionals: Register for the 2024 survey, which will open January 2024.

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Get Involved

Does your organization want to engage with the Foundation’s mission? Discover ways to get involved, from sending messages of appreciation to Wendy’s Wonderful Kids recruiters, to packing Care Kits of essential hygiene items for children waiting in foster care.

Get Involved

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