Contributions via a Section 125 cafeteria plan by the employer or by the employee are also free of FICA taxes (Social Security and Medicare taxes, a.k.a. payroll taxes). Contributions outside of a Section 125 plan are still deductible from ordinary income tax, but they are subject to FICA...
A health FSA is an employer-established benefit plan. Your employer can offer them with other benefits as part of a cafeteria plan. A health FSA allows you to be reimbursed for qualified medical expenses, including co-pays, eyeglasses, prescriptions, insulin, and other medical expenses not cove...
Section 125 Cafeteria Plan Benefits Contributions are deductible as a business expense; not subject to payroll taxes. Contributions are pre-tax, reducing taxable income; benefits received are generally tax-free if used for qualified expenses. Yes FSAs (Flexible Spending Accounts) Contributions are deduc...
and then turning around and taking it out shortly thereafter and having more flexibility, compared to the flexible spending account in a cafeteria plan; that really was the initial driver,” he says.
You will see that for both the W2 and Form 8889, cafeteria plan contributions function just like employer contributions,notemployee contributions. Employer vs. Employee Contributions on W2 When you receive your W2 at year end, you will have a Box 12 marked with “W” and youremployercontribution...