Section 125 Plans

The aca requires that in addition to plan documents and the spd large employers those with 50 or more employees.

Section 125 plans. A section 125 plan is part of the irs code that enables and allows employees to take taxable benefits such as a cash salary and convert them into nontaxable benefits. Like an fsa hsas enable people to set. Due to the uniqueness and complexities of federal tax law it is imperative to ensure a full understanding of the specific question presented and to perform the requisite research to ensure a correct response is provided.

Who provides section 125 plan administration. 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. A cafeteria plan also known as a section 125 plan is a written plan that offers employees a choice between receiving their compensation in cash or as part of an employee benefit.

A 125 cafeteria plan is a written plan that allows employees to elect between permitted taxable benefits such as cash and certain qualified benefits. If taken as a. The professionals at paychex make section 125 plans even more appealing by handling much of the frustrating work required to start and manage them so you can relax and enjoy the benefits.

In a section 125 plan or cafeteria plan employees can pay qualified medical dental or dependent care expenses on a pretax basis which has the effect of reducing their taxable income as well as their employer s social security fica liability federal income and unemployment taxes and state unemployment taxes where applicable. The following section 125 cafeteria plan features offer employees significant tax and money saving advantages. Cafeteria plans are employee benefit plans that meet the regulations of section 125 of the internal revenue code.

These benefits may be. Flexible spending accounts fsas. Further the right to continue health benefits on an employers plan referred to as cobra varies by state.

A section 125 plan is something that the employer must maintain separately from the health insurance policy or any other benefit program that their employees participate in and the section 125 plan includes a summary plan description which should be updated annually. An fsa allows employees to pay for qualified out of pocket medical expenses on a. Archer msas athletic facilities de minimis minimal benefits educational assistance employee discounts employer provided cell phones lodging on your business premises meals moving expense reimbursements no additional cost.