What is cafe 125

The premiums can be for employer-sponsored insurance plans or individual health policies. POPs are one of the most common types of Section plans. The Section rules specifically prohibit the following individuals from participating in plans:. Cafeteria Plan Advisors.

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Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Insurance Health Insurance. Table of Contents Expand. What Is a Section Plan? Who Can Open a Section Plan? Benefits to Employer and Employee.

What Can a Section Plan Cover? Use It or Lose It. Setting Up a Section Plan. Frequently Asked Questions. Key Takeaways A Section or cafeteria plan is an employer-sponsored benefit plan that gives employees access to certain taxable and nontaxable pretax benefits.

The data in Box 12 is for informational purposes only, so employees know the cost of their health coverage. Your employer may also use Box 12 to report certain retirement plan contributions and nontaxable moving expenses, under the required codes. If you have a Section dependent care plan, your employer must report any amounts it and you paid toward your account in Box Amounts over the limits are taxable and must go in your taxable wages in Boxes 1, 3 and 4.

The cafeteria plan amounts on your W-2 don't change your tax preparation and filing process. Since you paid your premiums with pretax money, the amounts are already deducted from your taxable wages in Box 1.

Grace Ferguson has been writing professionally since With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance.

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By: Grace Ferguson. The employee may use the money towards another benefit. Although, if the employee receives cash, that money is taxed. The following Section Cafeteria Plan features offer employees significant tax and money-saving advantages:. Section Cafeteria Plans also provide several important advantages to employers, especially those who own a small business.

They can also be fairly complicated to put together and administer. The plans lock employees into their designated contributions for a full year. With few exceptions, employees must wait until the following enrollment season to make plan changes.