A cafeteria plan is a type of employee benefit plan offered in the united states pursuant to section 125 of the internal revenue code its name comes from the earliest such plans that allowed employees to choose between different types of benefits, similar to the ability of a customer to choose among available items in a. Section 125 cafeteria plans are relatively easy to set up and are extremely beneficial to both employers and employees, but they should not be considered “ set-it-and-forget-it plans” an increase in department of labor audits warrants a much closer look by employers to ensure compliance and proper. If you want to continue to offer the same benefits to your employees, you may be able to do so with a properly implemented cafeteria plan learn more here. Scope—this article provides a comprehensive overview of employer-sponsored flexible benefits plans, which are also called section 125 plans, cafeteria plans and flex plans the article describes the basic features and provisions of these plans and examines operational, funding and administrative. Review the basics of cafeteria plans, including eligibility, contributions, reimbursements and more. For purposes of this section, if a benefit is provided under a cafeteria plan through employer contributions to a health flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction. A cafeteria plan is a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the internal revenue code it provides participants an opportunity to receive certain benefits on a pretax basis participants in a cafeteria plan must.
A section 125 cafeteria plan is a unique benefits plan that can provide some great tax breaks for the small business owner we explain it all here. Cafeteria plan advisors, inc our mission is simple: to provide exceptional service to our many clients and their employees in the administration of employer provided benefits our services include premium only plan (pop) allows for pre tax (salary reduction) of insurance premiums flexible spending healthcare accounts. Learn from massachusetts financial services specialists how to obtain a section 125 cafeteria plan in order to help your business and employees save on taxes.
A cafeteria plan is just a fancy term for a certain way to group the employee benefits you get at work, like health insurance it's important because if you're paying for any of the benefits, a cafeteria plan is a way to pay for them with pre- tax income, which is not federally taxed cafeteria plans are sometimes called section 125. Section 125 plans are often referred to as cafeteria plans these plans are referred to this way because participants can pick and choose or elect which, if any, benefits they would like to receive on a pre-tax basis participants in a cafeteria plan must be permitted to choose from a minimum of two or more benefits.
Definition of cafeteria plan in the financial dictionary - by free online english dictionary and encyclopedia what is cafeteria plan meaning of cafeteria plan as a finance term what does cafeteria plan mean in finance. In recent years, several states have experimented with a new use for an old idea, aimed at lowering costs for both employees and their employers section 125 cafeteria plans were designed as an optional feature for employers cafeteria plans allow employees to pay for a variety of health care expenses without paying any. Administrator of flexible spending accounts, health reimbursement accounts, and health savings accounts. Aflac offers supplemental cafeteria insurance plans and services for employees, which enables them with voluntary insurance & tax benefits.
What is cafeteria plan what does cafeteria plan mean cafeteria plan meaning - cafeteria plan definition - cafeteria plan explanation source: wikipediaorg. What is a cafeteria plan a cafeteria plan is a tax-free benefit program which is allowed under section 125 of the internal revenue code this was enacted by congress to help lower your cost by making these expenses tax-exempt from federal, state and fica taxes the plan allows participating individuals to pay for.
Cafeteria plan one of the most underused employee benefits for small businesses today is the section 125 cafeteria plan these plans simply allow employees to withhold a portion of their salary on a pre-tax basis to cover the cost of qualifying insurance premiums, medical expenses and dependent care expenses. Let's assume company xyz employs 100 people and would like to start offering health insurance it contacts an insurer and opens a cafeteria plan the plan allows employees to buy medical, dental and vision insurance on a pretax basis through the plan, the company also decides to offer adoption assistance and group. These proposed amendments are intended to reactivate in puerto rico cafeteria plans and make the adoption of these plans more attractive to puerto rico employers by expanding the list of “qualified benefits” that they may be provided to puerto rico employees however, as more fully explained below. As an employer, you may fall into one of these categories when it comes to cafeteria plans: you have a viable written plan document you have an old plan document that was never amended over the years you think that you have a cafeteria plan, but really don't because it wasn't put in writing you don't.
A cafeteria plan is a reimbursement plan governed by irs section 125 which allows employees to contribute a certain amount of their gross income to a designated account or accounts before taxes are calculated these accounts can be for insurance premiums, medical expenses and dependent daycare expenses , from. An employer offers a cafeteria plan to its employees so that they can buy benefits with pre-tax dollars this plan allows employees to reduce their income tax liabilities one type of cafeteria plan is the flexible spending account (fsa), under which cash is withheld from employee pay and stored in an account. Understand your plan: -healthcare fsa overview -dependent care fsa overview -eligible expenses -over-the-counter fsa expenses adobe pdf - mocafe faq manage your plan: -online account access -claim forms -set up direct deposit -change your election. A cafeteria plan is an employee benefits plan administered under section 125 of the federal tax code that lets employees pay certain expenses with pretax income it's called a cafeteria plan because employees choose the benefits they want, just as they choose the items they want from the company cafeteria funding a.