What Is A Section 125 Plan

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What is a section 125 plan. Section 125 plans section 125 plans from paychex can save money for your company and employees. 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. A 125 cafeteria plan is a written plan that allows employees to elect between permitted taxable benefits such as cash and certain qualified benefits.

Section 125 is officially an irs pretax vehicle nicknamed cafeteria plan because employees can choose pretax benefits like medical or dental insurance or opt to receive the equivalent amount on their paycheck paying taxes on. Employees receive benefits as pre tax deductions. The section 125 program is a tremendous opportunity for you to enhance your benefits package.

A section 125 cafeteria plan lets a business owner offer affordable employee benefits while giving themselves a payroll tax break. A section 125 cafeteria plan is an employer sponsored benefits plan that lets employees pay for certain qualified medical expenses such as health insurance premiums on a pre tax basis. It allows for certain employee paid group insurance premiums to be paid with pre tax dollars.

A plan offering only a choice between taxable benefits is not a section 125 plan. Section 125 plan. Employees their spouses and dependents can all benefit from section 125 plans.

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. Section 125 is a written plan that lets employees choose between qualifying benefits and cash. A section 125 plan is a written plan that allows participants to receive certain benefits called qualified benefits on a pretax basis.

The premium only plan is the building block of the section 125 plan.