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![]() Tax AdvantageD PlansCafeteria Plans are tax advantaged plans that allow you to:
When the employee reduces their income for a Cafeteria Plan, the employer is generally exempt from FICA/FUTA taxes. There can be an impact on Social Security benefits at disability/retirement resulting from a lack of employer/employee contribution to FICA, as well. In a Cafeteria/Premium Conversion plan, the employees agree to reduce their income to fund their qualified insurance premiums on a before tax basis. This is the most common type of Cafeteria Plan elected by employers of less than 100 people. Cafeteria Plan/Flexible Spending Arrangements have four key components that an employer should know:
Cafeteria/Dependent Care Assistance plans allow the employee to fund dependent care expenses for qualified dependents (children under age 13, physically/mentally handicapped dependent of the employee) on a pre-tax basis. These plans are also subject to non-discrimination testing and the filing of IRS form 5500. Examples of expenses that may be paid via a Cafeteria/Dependent Care Assistance plan include at home child care, household services related to the care of the elderly or disabled and care at nursery schools. In general, the employee can contribute up to $5,000 annually into a Cafeteria/Dependent Care Assistance plan. |
Your employees can fund their qualified insurance premiums on a before tax basis. Copyright © 2005-2010 Benefit Consulting Group. All Rights Reserved. HR Benefits | Site Map | Site design by Chicago Web Design. |