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IRS code Section 125 allows an employer to set up a Premium Only Plan (POP), where an employee's insurance premium contributions can be deducted from his or her payroll on a pre-tax basis. This can save employees up to 40% on income taxes and payroll taxes. The employer also saves on these taxes.
To start a section 125 benefits plan, employers have to draft a document that outlines the benefits offered, contribution limits, participation rules and other information required by the IRS.
A section 125 plan is the only means by which an employer can offer employees a choice between taxable and nontaxable benefits without the choice causing the benefits to become taxable.
A Section 125 Premium Only Plan document allows your employees to voluntarily agree to a \u201csalary reduction\u201d so that the employer can pay their insurance premium as a business expense.
Cafeteria Plans are an employer-sponsored benefit that lets employees pay certain qualified medical expenses \u2013 such as health insurance premiums for medical, dental, and vision coverage \u2013 on a pre-tax basis. They are sometimes called Section 125 Cafeteria Plans.
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People also ask

In addition to medical, dental, and vision, section 125 plans are a valuable, cost-saving benefit. Employees enjoy the flexibility of using these accounts so they can better control their tax liabilities.
The IRS requires a Section 125 Plan Document so that employees can pay for health premiums, FSA contributions, and other group benefits with tax-free payroll deductions.
The IRS requires a Section 125 Plan Document so that employees can pay for health premiums, FSA contributions, and other group benefits with tax-free payroll deductions.
A cafeteria plan, also known as a section 125 plan, is a written plan that offers employees a choice between receiving their compensation in cash or as part of an employee benefit.
125 plan is required for employers who want to allow employees to choose the qualified benefits they want and avoid paying income taxes on the amount of wages they contribute to obtain those benefits.

section 125 form