Section 125 Flexible Spending Account

Flexible spending accounts also known as a section 125 cafeteria plan flexible spending accounts are designed to be offered by employers to employees who wish to participate.

Section 125 flexible spending account. This notice provides guidance on the effective date of the 2 500 limit as. An fsa allows employees to pay for qualified out of pocket medical expenses on a pre tax basis. Since funds are placed into this account pre tax it reduces the amount of taxable income.

Since 1993 advanced benefit strategies has been an industry leader in section 125 flexible spending account administration cafeteria plans transit commuter tax benefits section 105 health reimbursement arrangements and cobra administration. Section 125 cafeteria plans. This provides up to 40 tax savings to you.

Flexible spending accounts fsas governed by internal revenue code irc section 125 allow you to have pre tax payroll deductions for certain medical and dependent care expenses. Flexible spending accounts fsa the section 125 plan also lets you redirect a portion of your pay through the convenience of payroll deduction to create a spending account for healthcare and or dependent care expenses. The money that goes into your spending account s is deducted on a pre tax basis.

Purpose and overview. Section 125 also permits your insurance premiums to be taken on a pre tax basis. A section 125 plan is part of the irs code that enables and allows employees to take taxable benefits such as a cash salary and convert them into nontaxable benefits.

Section 125 plans section 125 plans from paychex can save money for your company and employees a section 125 premium only plan pop and flexible spending account fsa also known as cafeteria plans can reduce fica federal and state and local taxes for your company and employees when combined with your company s group health insurance. These benefits may be. If the fsa is the only benefit provided employees may use the account to cover health insurance premiums.

The following section 125 cafeteria plan features offer employees significant tax and money saving advantages. Saves employees on federal and most state and local withholding taxes while helping them pay for eligible out of pocket. Health flexible spending arrangements not subject to 2 500 limit on salary reduction contributions for plan years beginning before 2013 and comments requested on potential modification of use or lose rule.