What is a cafeteria plan under IRS Section 125?
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.
What is cafeteria 125 on my w2?
SECTION 125 is your employer’s benefit plan. It is also known as a “cafeteria plan”. Usually, what is reported there is your medical insurance premiums that are paid with pre-tax income. They are not taxed and are not included in your W-2 Box 1 wages so you can not deduct them as medical expenses.
Is a premium only plan the same as a Section 125 plan?
The Premium Only Plan is the building block of the Section 125 Plan. It allows for certain employee paid group insurance premiums to be paid with pre-tax dollars. The qualified premiums (if offered by employer) are: Health.
Where does a 125 cafeteria plan go on w2?
Your employer may report your cafeteria plan deductions in Box 14, which is labeled “Other.” It might use the code “Section 125” or “Café 125,” and then state your pretax payments.
What does a cafeteria plan include?
Cafeteria Plans are an employer-sponsored benefit that lets employees pay certain qualified medical expenses – such as health insurance premiums for medical, dental, and vision coverage – on a pre-tax basis. They are sometimes called Section 125 Cafeteria Plans.
What is a disadvantage of cafeteria style plans?
Employees who exceed their allocated spending amount pay a partial premium to their employer. So if Emma spends $1,000 over her allocated contribution, she pays a portion of that amount herself. The disadvantage of a cafeteria plan is it usually takes more time to administer and is typically more complex.
What is a cafeteria plan contribution?
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.
Is Aflac a 125 cafeteria plan?
Looking for a way to save? Let Aflac help make tax savings easy for you and give your employees the savings they deserve through Section 125 Cafeteria Plans. Aflac helps companies administer premium-only plans and Flexible Spending Accounts (FSAs) provided by WageWorks®, a preferred partner of Aflac.
What does Cafe 125 include?
Benefits provided by plans covered under section 125 include adoption and dependent care assistance, health insurance, 401k and group term life insurance policies. They are called cafeteria plans because employees are given a list of benefits to choose from, similar to a cafeteria-style menu.
How to create a section 125 cafeteria plan?
Choose Lists > Payroll Item List.
What expenses are allowed in a section 125 cafeteria plan?
What expenses are allowed in a section 125 cafeteria plan? A wide variety of medical and child care expenses is eligible for reimbursement under a section 125 cafeteria plan. As for medical items and treatments, there are dozens of eligible expenses that can be reimbursed. The following are eligible expenses: acupuncture, alcoholism treatment, ambulance services, What does Section 125 on W2 mean? SEC 125 is your employer’s benefit plan.
What are the benefits of Section 125 cafeteria plan?
– Limited time frames: Participants who put funds into a section 125 plan must use those funds during the plan year, otherwise those funds will be lost. – Employees fund expenses upfront: Employees are reimbursed for expenses as part of a health flexible spending account. – Initial setup fees: For the employer, an initial setup fee is present.
Can employers save taxes with a section 125 cafeteria plan?
Can Employers Save Taxes with a Section 125 Cafeteria Plan? The short answer is “yes, generally.” But let’s take a look at what a Section 125 cafeteria plan is. A cafeteria plan provides an array of voluntary fringe benefits, allowing an employee to choose the ones that best fit their individual needs.