a section 125 plan, often known as a cafeteria plan, enables you to increase employee benefits without going over budget because of its considerable tax savings.
A Section 125 Cafeteria Plan, also known simply as a cafeteria plan or a flexible benefits plan, is a type of employee benefits plan governed by Section 125 of the Internal Revenue Code in the United States. It allows employees to choose from a menu of pre-tax benefits, similar to ...
Section 125 plans must be created by an employer. The benefits are available to employees, their spouses, and their dependents when a plan is created. Depending on the circumstances and details of the plan, Section 125 benefits may also extend to former employees but the plan cannot exist prim...
Sec. 125 plans are covered by the Employee Retirement Income Security Act (ERISA), which includes requirements for written plan documents, a trust fund to hold the assets, proper recordkeeping, and periodic notices to the participants and the government. If a Sec. 125 plan uses an insurance c...
Internal Revenue Service's proposed regulation on tax code Section 125 cafeteria plans. According to the article, practitioners should prepare their cafeteria plan documents to meet the requirements of the proposed regulation. Document requirements include a description of the benefits available under the...
The IRS has reiterated, in IRS Information Letter 2019-0028, that while a Section 125 cafeteria plan may allow participants to make a mid-year pre-tax contribution election change because of the occurrence of certain events (informally called change in status or qualifying events), the plan is...