Section 125 Plans

The best of both worlds for the Employer and Employee. A section 125 plan is an employee benefit plan, authorized by Section 125 of the Internal Revenue Code, which allows employees to redirect a portion of their salaries into the plan on a PRETAX basis. This can provide significant tax savings for both the employee and employer.

Through a simple payroll deduction, your employees can pay for the following on a PRETAX basis.

Dependent Care Expenses such as child care or adult dependent care
Unreimbursed Health Expenses such as deductibles and coinsurance, medical and dental expenses
Group Insurance Premiums (Premium Plan) includes medical, dental, disability and term life

Potential Benefits for Employer and Employee

Benefits to the Employer:

Reduction of payroll related costs
NO Social Security Taxes (FICA)
NO Medicare Tax
Lower Workers' Compensation Premiums (check with your carrier)

Benefit to Employee:

Reduction of payroll related costs
NO Social Security Taxes (FICA)
NO State Income Tax
NO Federal Income Tax
NO Medicare Tax

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with professional advice. Information is subject to change without notice.