What is a 125 insurance plan?
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.
Is section 125 the same as FSA?
Flexible Spending Accounts (FSAs), governed by Internal Revenue Code (IRC) Section 125, allow you to have pre-tax payroll deductions for certain medical and dependent care expenses. Section 125 also permits your insurance premiums to be taken on a pre-tax basis. This provides up to 40% tax savings to you.
What is Section 125 plan document?
A Section 125 Premium Only Plan document allows your employees to voluntarily agree to a “salary reduction” so that the employer can pay their insurance premium as a business expense.
What does IRC 125 mean?
For Health Insurance Premiums, Dependent Care Assistance Program (DeCAP), and Health Care Flexible Spending Account (HCFSA): The amounts for these programs, covered under Section 125 of the IRS code, are reflected in Box 14, IRC125.
What are considered Section 125 deductions?
A Section 125 plan typically lets employees use pretax money to pay for health insurance premiums (medical, dental, vision). Other options include retirement deposits, supplemental life or disability insurance, Health Savings Accounts, and various medical or dependent care expenses.
Is 401k section 125?
What other terms are used to describe a 401(k) cafeteria plan? These plans are sometimes referred to as Section 125 Plan (from the applicable IRS code) or a flexible benefits plan.
Is 401k a Section 125 plan?
Are Section 125 deductions reported on w2?
The total dependent care benefits the employer paid to the employee or incurred on the employee’s behalf (including amounts from a section 125 plan) should be reported in Box 10 of Form W-2.
What is Section 125 Premium Only plan?
A Section 125 premium-only-plan (POP), is a cafeteria plan which allows employees to pay their health insurance premiums with tax-free dollars. Traditionally, POP plans have been used in combination with employer-sponsored group health insurance plans.
Is 401k considered section 125?
Are Section 125 deductions reported on W-2?
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