What is an example of a cafeteria plan?
Common examples of Section 125 cafeteria plans: Premium Only Plans (aka POPs, see Section 125 Premium Only Plan Rules & Regulations) Flexible Spending Accounts (aka FSAs) Contributions to Health Savings Accounts (aka HSAs)
What are the four categories of cafeteria plans?
What is a cafeteria plan?
- Flex Account. One of the most common cafeteria plans is a flex account, or flexible spending account (FSA).
- POP Plan. Next is a Premium Only Plan (POP).
- Dependent Care Account. Finally, the last type of cafeteria plan is a Dependent Care flexible spending account.
Is a Section 125 plan required by law?
Income tax savings for the employee: A Sec. 125 plan is required for employers who want to allow employees to choose the qualified benefits they want and avoid paying income taxes on the amount of wages they contribute to obtain those benefits.
Is 401k considered a cafeteria plan?
A 401(k) cafeteria plan allows employees who are participating in their employer’s 401(k) plan to also choose additional types of benefits from a smorgasbord of options on a pretax basis. These plans are sometimes referred to as Section 125 Plan (from the applicable IRS code) or a flexible benefits plan.
What are cafeteria plan deductions?
A Cafeteria Plan allows employees to pay certain qualified expenses (such as health insurance premiums) on a pre-tax basis, thereby reducing their total taxable income and increasing their spendable/take-home income.
What are cafeteria plan contributions?
How does a cafeteria plan work? Employer contributions to the cafeteria plan are usually made pursuant to salary reduction agreements between the employer and the employee in which the employee agrees to contribute a portion of his or her salary on a pre-tax basis to pay for the qualified benefits.
Is 401k a 125 cafeteria plan?
Is 401k included in a cafeteria plan?
A 401(k) cafeteria plan allows employees who are participating in their employer’s 401(k) plan to also choose additional types of benefits from a smorgasbord of options on a pretax basis. These benefits can include: Other types of retirement savings accounts such as a 401(k) or profit-sharing plan. …