What is a cafeteria plan document?

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.

What is Section 125 plan document?

A cafeteria plan, also known as a section 125 plan, is a written plan that offers employees a choice between receiving their compensation in cash or as part of an employee benefit. Employee contributions toward cafeteria-plan benefits are made pre-tax.

How much does a Section 125 plan cost?

Section 125 Plan Document package $99. The IRS requires a Section 125 Plan Document so that employees can pay for health premiums, FSA contributions, and other group benefits with tax-free payroll deductions.

What is a simple cafeteria plan?

A SIMPLE Cafeteria Plan allows employees to use pretax funds to pay their portion of the health, vision, dental, and other employer-sponsored welfare premiums.

Can I write my own Section 125 plan?

Section 125 of the Code clearly states that “a written plan” is required as part of a Cafeteria Plan that allows employees to choose to participate in a plan with qualified benefits. Therefore, tax-advantage treatment of employee group benefits is not allowed without a written plan document in place.

What qualifies for Cafeteria Plan?

To qualify as a Cafeteria Plan, the plan must include: At least one taxable benefit option (considered part of the employee’s salary), and. At least one qualified pre-tax benefit.

What is a simple Cafeteria Plan?

How do I set up a Section 125 cafeteria plan?

To set up a Cafeteria Plan Employee payroll item with Custom Setup:

Choose Lists > Payroll Item List.
Select the Payroll Item > New.
Select Custom Setup > Next.
Select Deduction > Next.
Enter a name for your payroll item (for example, 125 Health Insurance Plan), and then select Next.

What does cafeteria plan stand for?

A “cafeteria” plan, or Cafe 125, allows employees to pay certain expenses with pre-tax dollars. It is known as a cafeteria plan because the menu allows for various options.

What is a 125 cafeteria plan document?

An IRS Section 125 Cafeteria Plan is a plan established by an employer that allows his employees to contribute a portion of their salary each month, income tax–free to them and salary tax–free to their employer. Qualified benefits are paid for with pre–tax dollars that would otherwise be paid for with after tax dollars.