{"id":14738,"date":"2022-12-31T01:00:41","date_gmt":"2022-12-31T01:00:41","guid":{"rendered":"https:\/\/ceowebltd.com\/blog\/?p=14738"},"modified":"2025-09-10T21:51:47","modified_gmt":"2025-09-10T21:51:47","slug":"what-is-a-section-125-cafeteria-plan-2","status":"publish","type":"post","link":"https:\/\/ceowebltd.com\/blog\/what-is-a-section-125-cafeteria-plan-2\/","title":{"rendered":"What is a Section 125 Cafeteria Plan?"},"content":{"rendered":"

These steps can be greatly simplified by working with a payroll service provider. Many, like ADP, are capable of integrating payroll and benefits to ensure that cafeteria plan contributions and taxes are calculated accurately each pay period. In addition to being tax advantageous, cafeteria plans can help employers attract and retain talent. Employees today place great emphasis on having access to flexible benefits that improve the well-being of themselves and their families. When choosing between two prospective employers, a section 125 plan could be the deciding factor.<\/p>\n

You can also partner with local vendors for prepackaged grab-and-go meals. Allergy medicines, cold medicines, contact lens solutions, first-aid kits, pain relievers, pregnancy tests, sleeping aids, and throat lozenges are among the dozens of eligible items. Working with an adviser may come with potential downsides, such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns.<\/p>\n

Taking advantage of these tax-advantaged savings accounts not only helps you save on your medical expenses but also reduces your taxable income, resulting in potentially significant tax savings. A Section 125 plan lets employees set aside insurance premiums and other funds on a pretax basis. This can save workers 20% to 40% in taxes per year but these plans offer employers some tax-saving benefits as well. It can be worth it to suggest that your employer set up such a plan or keep it in mind if you’re job hunting so you can potentially hire on with a company that does offer a cafeteria plan. Any plan that qualifies under IRC section 125 and gives employees the option to choose from at least one taxable benefit and one qualified benefit may be considered a cafeteria plan.<\/p>\n

\n
\n

Table of Contents<\/p>\nToggle<\/span><\/path><\/svg><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n