cafeteria plan

(redirected from Section 125 Plan)
Also found in: Medical, Financial.

cafeter′ia plan`

a fringe-benefit plan under which employees may choose from among various benefits those that best fit their needs up to a specified dollar value.
References in periodicals archive ?
If an employer wants to offer employees pretax payroll deferrals to their health savings accounts, the employer needs to first create a Section 125 plan or cafeteria plan that allows HS A deferrals.
One of the most popular cost-savings strategies government finance officers use today is the Section 125 plan.
3) Following the original NAIC model statute, it defines a small employer plan as including any insurance whose premium is excluded from federal income tax as an employee benefit, and it notes that paying for insurance through a Section 125 plan has just this effect.
To help some individuals obtain insurance, the law requires employers with 11 or more employees to set up a "federal Section 125 plan" (Businesses with 10 or fewer employees don't have to set up a Section 125 plan, but may choose to do so.
Provides a tax credit for small employers for the cost of implementing a Section 125 Plan ($50 per employee; capped at $2,500)
Set up a section 125 plan, where health insurance comes out of an employee's paycheck pre-tax.
Employers should be encouraged to implement a Section 125 plan (also known as a cafeteria plan or salary reduction plan) to obtain these tax savings.
In addition to medical expenses, dependent care expenses can also be paid through a Section 125 Plan.
com Provider of payroll and other services, including section 125 plan administration.
Furthermore when an employee authorizes a tax-free wage reduction under a Section 125 plan, the company also saves its portion of the related payroll taxes: FICA, Medicare and unemployment.
Under the "premium conversion" Section 125 Plan, there is no administration.
Request for Qualifications: The possible services the Port and the Firm may from time to time, agree upon, may includethe following: Payroll assistance including processing monthly payroll in the client~s version of QuickBooks, and processing Section 125 plan claims to provide assistance as needed in the administration of employee benefit programs.