Section 125 Benefit Plan

Due to the complexity of these plans and their compliance issues contact a benefits administration professional who specializes in creating and administering these types of plans.

Section 125 benefit plan. Section 125 plans section 125 plans from paychex can save money for your company and employees. In addition to medical dental and vision section 125 plans are a valuable cost saving benefit. A section 125 plan is a written plan that allows participants to receive certain benefits called qualified benefits on a pretax basis.

A section 125 cafeteria plan lets a business owner offer affordable employee benefits while giving themselves a payroll tax break. Its name derives from title 26 section 125 of the united states tax code which establishes the rules employers must follow when operating a cafeteria plan. A plan offering only a choice between taxable benefits is not a section 125 plan.

The plan may make benefits. If an employee makes the election before the start of the plan year and other 125 requirements are satisfied the employee s election of one or more qualified. In fact 80 of employees would choose benefits over a pay raise.

Section 125 plans give your employees the power to choose from different benefits. Who may receive benefits under a cafeteria plan. The plan is called a cafeteria plan because it includes a menu of benefits for employees to choose from.

A section 125 plan is the only means by which an employer can offer employees a choice between taxable and nontaxable benefits without the choice causing the benefits to become taxable. Only you can decide if and when it makes sense for your company to offer a section 125 plan to employees. Offering competitive benefits attracts satisfies and retains top talent.

A 125 cafeteria plan is a written plan that allows employees to elect between permitted taxable benefits such as cash and certain qualified benefits. Employees enjoy the flexibility of using these accounts so they can better control their tax liabilities. A section 125 premium only plan pop and flexible spending account fsa also known as cafeteria plans can reduce fica federal and state and local taxes for your company and employees when combined with your company s group health insurance.