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Cafeteria Plan Cafeteria plans from take care® offer employees more choices. This is one of the reasons why more and more employers are offering them instead of "one size fits all" plans. The problem with one plan for everyone is that often, the benefits presented are not the ones people need or use. With choices, employees can select the plans that fit their lives. Cafeteria plans fall under IRS Code Section 125 and allow employees to choose between cash (which is taxable) and at least one qualified benefit that is nontaxable (meaning it will not be included in a participant's income for tax purposes). Contributions and benefits from other plans are governed under this plan document. Types of Benefits Offered Through Cafeteria Plans While the basics are the same, there are a wide variety of benefits offered under cafeteria plans and they can vary. Cafeteria plans can cover automobile, group-term life insurance, business travel accident insurance and, of course, health insurance. Medical and flexible spending accounts are quite common, as are 401(k) contributions. All of the above are nontaxable benefits. But there are usually a choice of taxable benefits as well, which can include group automobile or homeowner's insurance, vacation days or cash. Despite the fact that these benefits are taxable, they are still considered benefits, since employees may not have had access to them if not for the plan. No matter which benefits are chosen, there is one stipulation that applies to cafeteria plans, and that is that there are no rollover benefits (other than 401(k) contributions). |
Additional Topics Consumer-Directed Health Plans Consumer-Driven Health Accounts Dependent Care Flexible Spending Accounts Flexible Health Spending Accounts Flexible Medical Expense Accounts Healthcare Flexible Spending Accounts Health Reimbursement Arrangements IRS Section 125 Cafeteria Plans Medical Expenses and Income Tax Plan for Medical that Health Insurance Doesn't Cover Save 25% to 40% on Health Expenses Save on Co-Pays and Over-the-Counter Medications Save on LASIK and Orthodontic Costs Section 125 Plan Administration |
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