Section 125 Cafeteria Plan Administration

Dependent care reimbursement accounts allow plan participants to use salary reductions for child care and dependent care expenses on a pre-tax basis.

• The dependent must be under the age of 13, or physically or mentally incapable of self care
• The care cannot be provided by a spouse or dependent
• Employees save on federal and state income tax, along with FICA and Medicare taxes (approximately 30%)
• Employers save on FICA and Medicare taxes (7.65%)
• IRS non-discrimination rules apply
• Must have a written Plan Document
• Participants are required to receive a Summary Plan Description

Flexible spending accounts (FSAs) are medical reimbursement plans that are a flexible spending arrangement. They allow employees to take pre-tax salary reductions to pay for certain medical expenses for themselves, their spouses and/or dependents.

• Any employee is eligible (subject to employer-designed exclusions)
• Employees save on federal and state income tax, along with FICA and Medicare taxes (approximately 30%)
• Employers save on FICA and Medicare taxes (7.65%)
• Maximum contributions levels are set by the employer
• IRS non-discrimination rules apply
• Must have a written Plan Document
• Participants are required to receive a Summary Plan Description
• In some cases, Form 5500 is required

Premium Only Plans (POPs) allow employees to pay their share of premiums for group health, dental, vision and term life insurance on a pre-tax basis through salary reduction.

• Employees save on federal and state income tax, along with FICA and Medicare taxes (approximately 30%)
• Employers save on FICA and Medicare taxes (7.65%)
• Must have a written Plan Document Participants are required to receive a Summary Plan Description
• In some cases, Form 5500 is required