-
What is a Section 125?
-
Who is eligible for a
Section 125?
-
Who is
eligible to participate in a Section 125 plan?
-
What are the benefits of a Section 125 plan for employers?
-
What are the benefits of a Section 125 plan for employees?
-
What are the
requirements of a Section 125?
-
Why establish a Section 125 Cafeteria plan vs. Section 105 or Health
Savings Account 125 plan?
-
How much can
I save in taxes with a Section 125?
-
How do I participate in
a Section 125?
-
How much can
I contribute to a Section 125 plan?
-
What are eligible medical
expenses?
-
How do I get started
with a Section 125?
What is a Section 125?
A Section 125
Cafeteria Plan sometimes known as a Flexible Spending Plan allows employees
to pay for certain medical expenses on a pre-tax basis. By paying for these
expenses before being taxed, employees lower their taxable income, pay less
in taxes and increase their take home pay. These expenses include:
-
Employee
contributions toward medical-related insurance premiums.
-
Medical-related expenses such as deductibles, co-insurance, co-pays, or
uninsured medical expenses.
-
Dependant
care expenses.
Download
Free Section 125 Guide
top
Who is eligible for a Section
125?
Currently the
Internal Revenue Code
supports C corporations, S corporations, limited liability companies (LLC’s),
partnerships, sole proprietors, professional corporations and non-profits
for Section 125 plans.
Download
Free Section 125 Guide
top
Who is
eligible to participate in a Section 125 plan?
Employees can
be eligible to participate in a Section 125 plan if they work for an
employer who has a plan in place. An employee would need to qualify by the
employer’s requirements to be eligible. Companies from one employee, one
thousand employees, or any size are all eligible for Section 125 plans.
Download
Free Section 125 Guide
top
What are
the benefits of a Section 125 plan for employers?
An employer
saves the matching 7.65% (FICA) on every dollar that an employee runs
through a Section 125 plan. Employers are also able to realize other
benefits such as:
- Cost Control – An employer can control the
company’s share of medical costs, without limiting employee choices.
- Address the needs of a diverse workforce – An
employer can offer individually tailored benefits at little or no
additional cost to the company.
- Recruit and Retain Quality Employees – An
employer is viewed in a positive light by current and prospective
employees because of a benefit package is being provided with the
employee’s interests in mind.
- Depending on the particular state, there may also
be a workers compensation tax savings.
Download
Free Section 125 Guide
top
What are
the benefits of a Section 125 plan for employees?
Benefits of a
Section 125 plan are paying for medical expenses or dependant care with
pre-tax or tax-free dollars. Conservatively, employees can save 15% to 35%
on federal income taxes alone that they set aside in a Section 125 plan.
When factoring in city, state, Social Security and Medicare (FICA) the tax
savings are a huge plus for today’s family’s to increase cash flow and to
help defray the high cost of medical insurance and dependant care.
Download
Free Section 125 Guide
top
What are the
requirements of a Section 125?
An employer
retains the ability to set the requirements of a Section 125 plan. Probationary periods,
hours worked per week, years of service worked and age requirements are all
options for the employer to set as requirements of a Section 125 plan.
Utilizing our free counseling services will empower you in making sure you
choose the most effective plan options and put you in compliance with IRS
requirements.
Download
Free Section 125 Guide
top
Why establish a Section 125 Cafeteria plan vs. Section 105 or Health
Savings Account 125 plan?
Although each
has their respective benefits depending on the tax situation, the Section
125 Cafeteria plan has no limit on the contributions by either the employee
or employer; covers dependant care; covers transportation
costs; and has no medical insurance restrictions. Money in the Section 125
plan may not be carried over to the next plan year.
Conversely, the Health Savings Account (HSA) is
imposed a limit on funding, does not cover dependant care or transportation
costs and must be tied to a High Deductible Health Coverage plan. Money in a
HSA plan may be carried over to the next plan year.
Download
Free Section 125 Guide
top
How much can
I save in taxes with a Section 125?
An employer
saves $.0765 on every dollar pre taxed by an employee. Employees save $.30
on every dollar pre taxed. On average and employer can save $300 per
employee in payroll taxes.
Download
Free Section 125 Guide
top
How do I participate in a
Section 125?
An employee
would determine at the beginning of the plan year what funds they would like
to contribute on a pre-tax basis into the Section 125 account. Once per pay
period a portion of that number will be sent to the Section 125 account.
When an employee has a medical or daycare expense, the employee would simply
submit the expense to the Section 125 plan administrator and would receive
their tax-free dollars in the mail or by direct deposit from the Section 125
plan administrator.
Download
Free Section 125 Guide
top
How much can I
contribute to a Section 125 plan?
For medical
expenses, an employer and the Section 125 plan administrator set a limit
that can be contributed to the Section 125 plan account. There are no set
limits as defined by the Internal Revenue Service. There is however, a cap
for dependant care set at $5000 per family per year.
Download
Free Section 125 Guide
top
What are eligible medical
expenses?
View
Eligible Medical Expenses for section 125 plans.
Download
Free Section 125 Guide
top
How do I get started with
a Section 125?
- Our plan document services provided by
TASC, pioneered the use of Section 125 plans, allowing
businesses to save money on healthcare and other out-of-pocket
medical expenses. TASC provides a long-term, value-oriented
approach to your Section 125 plan. However it’s measured –
dollars and cents or reduction of late-night headaches and
worries – TASC provides consummate value to our clients and
providers.
- A true commitment to low overhead with a
no-nonsense approach helps keep our fees low and makes our
service affordable.
- Our document service partner offers well
seasoned financial professionals with years of experience. We
offer an unparalleled level of customer service. We stand behind
our services and make sure everything is exactly right.
- An endorsement of technology. From
on-line communications to faster processing to the Benefits
Debit MasterCard, we recognize the importance of technology in
making many aspects of business more efficient. We continue to
use these methods as a way to save time, save money, improve
processes and generally make things easier.
- A promise. As we head into the future,
you can count on our growth and innovation to raise the level of
our services in every regard. Our goal remains to continually
increase customer satisfaction.
- Audit guarantee.
-
Additional highlights – Click here!
Download
Free Section 125 Guide
top
IRS Section 125 Information
IRS
Dependent Care Information
