| A Flexible Benefits Plan (Cafeteria Plan) is a written plan, qualified
under Internal Revenue Code section 125. With a Cafeteria Plan,
employees may reimburse certain benefits through voluntary salary
reductions.
One of the most attractive features of a Flexible Benefits Plan
is that it provides the employee with a valuable benefit and saves
the employer money at the same time. Under Section 125 rules,
the employer does not have to pay payroll taxes on the salary
reductions that the employees elect. The savings include the employer's
portion of Social Security, federal and state unemployment taxes,
worker's compensation premiums and any other costs based on taxable
salary. The savings usually average from 10% to 15% (depending
on worker's compensation premiums) of all employee salary reductions
and typically more than offset all installation and administration
fees.
Annual Salary Reduction (35
ee's x $1,500/ea.) -- $52,500
FICA saved ($52,500 x 7.65%)
-- $4,016
Other savings (3%) -- $1,575
(workers comp premiums, unemployment
taxes, etc.)
Total Benefit to Employer ($4,016
+ $1,575) -- $5,591
|
PREMIUM CONVERSION PLAN - Premiums paid by employees for the
employer's group medical, dental, optical, disability, or group
term life insurance (up to $50,000) are deducted from the employees'
gross compensation before any taxes are calculated. The employer
then includes this amount in the premium payment to the insurance
carrier just as he would without a plan.
FLEXIBLE SPENDING ACCOUNT PLAN - Employees elect a portion of
their income to be directed, pre-tax, into Flexible Spending Accounts
(FSA's) which are set up to reimburse expenses, such as, unreimbursed
medical expenses (deductibles, co-payments, non-covered expenses),
dependent care expenses (child care or elder care), and/or premiums
for individual health insurance (medical, dental, optical and
disability policies not sponsored by an employer).
Owners of a sole proprietorship or S corporation, partners of
a partnership and members of an LLC may not participate in a Flexible
Benefits Plan although they may sponsor a Plan for their employees.
As an employer, when you become a client with Associates In Excellence
you will be assigned one administrator who will coordinate plan
design and implementation, explain the plan to you, assist employees
with making plan elections, prepare reimbursement checks with
monthly reports to the Employer, prepare required government returns,
prepare required filings with the Department of Labor and be available
for telephone support.
For more information:
Download or view the AIE
Cafeteria Brochure (Requires FREE Adobe
Acrobat Reader)
Contact our cafeteria department at cafeteria
at aiebenefits.com.
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