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  • Section 125 Plan Document Requirements

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New York Annual Conference of the United Methodist Church Section 125 Cafeteria Plan Adoption Agreement Effective date: January 1, 20 The undersigned Employer hereby established a Qualified Cafeteria.

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A Section 125 plan typically lets employees use pretax money to pay for health insurance premiums (medical, dental, vision). Other options include retirement deposits, supplemental life or disability insurance, Health Savings Accounts, and various medical or dependent care expenses.

You might be confused to see "Cafe 125" listed on your W-2 form. This may sound like it has something to do with where you go on your lunch break, but there is a more reasonable explanation. "Cafe 125" stands for IRS regulation code section 125 regarding tax-free "cafeteria" employee benefit plans.

What Is a Section 125 (or Cafeteria) Plan? A Section 125 plan is part of the IRS code that enables and allows employees to take taxable benefits, such as a cash salary, and convert them into nontaxable benefits. These benefits may be deducted from an employee's paycheck before taxes are paid.

A Section 125 plan must offer employees a choice between at least one taxable benefit (such as taxable compensation) and one or more qualified benefits. Benefits that are not qualified benefits cannot be offered under a Section 125 plan.

IRS Requirement for pre-taxed employee benefits. If you are an employer wanting to allow your employees to pay group health and other insurance premiums with pre-tax salary deductions, the answer is yes, you need a Section 125 plan document.

Plan Design A Section 125 Plan must offer a choice between at least one taxable benefit (such as salary) and one qualified benefit (such as major medical coverage). A plan that does not offer this choice is not a Section 125 Plan and may be disqualified by the Internal Revenue Service (IRS) in the event of an audit.

Starting a section 125 plan requires following these three simple steps: Complete the necessary plan documents. Notify employees that you are offering a Section 125 cafeteria plan. Hire a TPA to administer your Section 125 plan and process reimbursements.

There is currently no annual filing requirement for Section 125 Plans. However, the underlying benefits may be required to file a Form 5500 if they are considered a Health & Welfare Plan.

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© Copyright 1997-2025
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Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
DMCA Policy
About Us
Blog
Affiliates
Contact Us
Privacy Notice
Delete My Account
Site Map
All Forms
Search all Forms
Industries
Forms in Spanish
Localized Forms
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate workflows
DocHub
Instapage
Social Media
Call us now toll free:
1-877-389-0141
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232