Section 125 "Cafeteria" Plan : Beaini Financial Solutions

Section 125 "Cafeteria" Plan

IRS Section 125, also known as “Cafeteria” Plan allows both your Company and your employees to take advantage of pre-tax contributions to help lower the amount of taxes payable and increase employees’ take-home pay. The contributions can be allocated towards health insurance premiums or dependent care expenses not covered by the insurance.

Your employees can benefit from Cafeteria Plan in place in form of:

  • Premium Only Plan (POP)
    Allows for certain group health insurance premiums to be paid using pre-tax dollars that results in lower gross income for tax purposes for the employees and in turn minimizes the amount of taxes payable for the company
  • Flexible Spending Account (FSA)
    Allocating a portion of employees’ paychecks on a pre-tax basis to a FSA account helps them pay for certain medical or dependent care expenses throughout the year by direct reimbursement from Cafeteria Plan administrator