Get IA Form 125 2013-2024

A Section 125 (POP or Cafeteria) plan is a written plan Section 125 is part of the U. S. Code where the Treasury (IRS) lays out the rules for employers wanting to allow employees the option of pre-tax salary deductions to pay group health and related insurance premiums.

Section 125 is part of the IRS Code that allows employees to convert a taxable cash benefit (salary) into non-taxable benefits. Under a Section 125 program you may choose to pay for qualified benefit premiums before any taxes are deducted from employee paychecks.

A Section 125 Cafeteria Plan is an employer-sponsored benefits plan that lets employees pay for certain qualified medical expenses such as health insurance premiums on a pre-tax basis. ... Contributions to the cafeteria plan are made before taxes are taken out of their paychecks.

However, in order for the employer to be in compliance with laws governing pre-tax treatment of insurance premiums, the company must have a Section 125 plan document in place as defined by the code, which means you need a Section 125 plan document to do it.

A "Cafeteria Plan" (see Section 125 of the IRS Code) is a benefit provided by an employer which allows an employee to contribute a certain amount of his or her gross income to a designated "account" before taxes are calculated. ... The employer also realizes savings on FICA withholding tax for each participating employee.

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.

Certain contributions made through a Section 125 plan are exempt from federal income tax in the usual way but they are subject to Social Security and Medicare taxes. These benefits include 401(k) contributions and adoption assistance.

Section 125 is part of the IRS Code that allows employees to convert a taxable cash benefit (salary) into non-taxable benefits. Under a Section 125 program you may choose to pay for qualified benefit premiums before any taxes are deducted from employee paychecks.

A Section 125 Premium-Only-Plan (POP), is a cafeteria plan which allows employees to pay their health insurance premiums with tax-free dollars. Traditionally, these POP plans have been used in combination with employer-sponsored group health insurance plans.

Because cafeteria plans, also called Section 125 plans, are covered under ERISA, they are subject to the same documentation, reporting and administration requirements as all other ERISA plans, such as 401(k), 401(a) and 403(b) plans; simplified employee pension (SEP) plans; and profit-sharing plans.

A Section 125 plan allows employers to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences. Without a Section 125 plan, employee contributions can only be made with after tax dollars.

WHO IS ELIGIBLE TO PARTICIPATE IN A SECTION 125 PLAN? While there are some exceptions, generally, an employer can define which classes of employees and former employees are eligible to participate in a Section 125 plan. Some employers impose a waiting period before new employees are eligible to participate.

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.

Under a cafeteria, or Section 125, plan, you pay for your employer-sponsored benefits with pretax money. Your employer deducts your payments from your wages before withholding certain taxes. Your employer doesn't include your pretax payments in your taxable wages on your annual W-2.

Cafe 125 on a W-2 tax form refers to a cafeteria plan, in which an employer offers workers a choice between various job benefits. ... The majority of IRS Code 125 cafeteria plans are not subject to Medicare taxation, and many employers find these plans beneficial for both their companies and for their employees.