Do you need a Section 125 Plan Document? Get one today!
IRS Requirement for pre-taxed employee benefits
If you are an employer who wants to allow your employees to pay group health and other supplemental insurance premiums with pre-tax salary deductions, the answer is yes, you need a Section 125 plan document.Tax savings for everyone with a plan document
A Section 125 Premium Only Plan document allows your employees to voluntarily agree to a "salary reduction" so that the employer can pay their insurance premium as a business expense.A Section 125 (POP or Cafeteria) plan is "a written plan"
Section 125 is part of the U. S. Code where the Treasury (IRS) lays out the rules for employers wanting to allow employees the option of pre-tax salary deductions to pay group health and related insurance premiums.Section 125 (d) Cafeteria plan defined
For purposes of this section—
(1) In general
The term “cafeteria plan” means a written plan under which—
(A) all participants are employees, and
(B) the participants may choose among 2 or more benefits consisting of cash and qualified benefits.
Understanding "qualified benefits"
Qualified benefits are defined as "not includible in the gross income of the employee" (ref. Section 125(f)). In other words, the premiums are tax-free within a POP or Cafeteria plan.What does all that mean?
Most employers offer their group health plan to employees through pre-tax (tax-free) salary deductions. It's just taken for granted that it's done that way.However, in order for the employer to be in compliance with laws governing pre-tax treatment of insurance premiums, the company must have a Section 125 plan document in place as defined by the code, which means you need a Section 125 plan document to do it.
- Section 125 of the Code clearly states that "a written plan" is required as part of a Cafeteria Plan that allows employees to choose to participate in a plan with qualified benefits.
- Without a written plan document, the plan is not compliant with Section 125 of the Code.
- Therefore, tax-advantage treatment of employee group benefits is not allowed without a written plan document in place.
Get your written plan today
The written plan must be in place -- signed by the employer with the Summary Plan Description and election forms copied to employees -- before any pre-tax salary deductions are taken.
Deluxe Binder Edition
Save Big with Tax-Free Group Life & Health Insurance Premiums at Work
$149 one-time fee in PDF via email*
$199 one-time fee in PDF email* + Deluxe Binder via USPS
Core Documents provides employers with everything they need to establish an IRS- and DOL-compliant Section 125 benefits plan in PDF format for just $149. This cost reflects a one-time setup fee, not an annual charge.
For an additional $50, employers can choose the Deluxe Binder option that includes the PDF email version plus a printed plan document in a 3-ring binder (shipped via USPS).
And, for just $30 more, you can add the HSA Module for additional tax savings for the employee and the employer.
Order your $149 Section 125 POP Package Today!
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No annual fee -- Core Documents will notify you when there are sufficient changes in the Code to require amending and restating your Plan. You can amend and update anytime for just $129, and only when necessary, which is the most cost-effective way to maintain a Section 125 Plan.
The Trusted Source of Affordable Benefit Plan Documents for over 20 Years.
Core Documents is the country's leading provider of cost-effective, tax-saving benefit plan documents for Section 125 Cafeteria plans and Health Reimbursement Arrangements. The Trusted Source since 1997, thousands of satisfied agents and employer groups nationwide rely upon Core Documents for free plan design consulting services, plan document updates, ERISA Wrap SPDs, and administration services.
