Section 125 Cafeteria Plan Benefits

For the most part you cannot include a benefit that defers an employee s pay.

Section 125 cafeteria plan benefits. It can help businesses save money while keeping employees happy. 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. Not all benefits are included under a section 125 cafeteria 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. 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 section 125 cafeteria plan lets a business owner offer affordable employee benefits while giving themselves a payroll tax break.

It provides participants an opportunity to receive certain benefits on a pretax basis. A section 125 cafeteria plan offers a cost effective benefits plan for companies.