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A cafeteria plan is a type of benefit plan offered by employers that allows employees to choose between taxable and non-taxable benefits. The cafeteria part of the name comes from the plans flexibility, which allows employees to pick which benefits they want.
What are a major disadvantages of a cafeteria benefit plan?
A cafeteria plan is the overarching term for a Section 125 plan. A Premium Only Plan (POP) is the most basic type of cafeteria plan. It allows employees to pay their portion of group health benefits, dental, and vision insurance premiums with pre-tax dollars.
What does a cafeteria style benefit plan do?
Administration: There is usually a setup fee, and although offset by the cost savings, the initial cost and additional infrastructure expenses may be more than some small businesses can manage. Plus, cafeteria plans can be complex and time-consuming to administer.
What does cafeteria mean on my paystub?
Benefits of cafeteria plan Employee choice: Your employees choose how much in pretax dollars they want to contribute and how they want to spend that money. Reduced tax liability: With employee contributions being pretax, they get the advantage of having a lower gross income to reduce their tax liability.
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by D Blackwell 1985 In response to a rapidly changing work force, many employers have developed cafeteria plans for their employees under section 125 of the.
Dec 31, 2020 Each benefit has a Summary Plan Description document that provides a complete listing of services, limitations, exclusions, and a description of
FAQs for government entities regarding cafeteria plans
Apr 21, 2025 A cafeteria plan is a written plan that allows employees to receive pretax benefits, choosing between at least one taxable and one qualified
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