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If your employees are paying medical expenses, insurance premiums or dependent care expenses then you could allow them to pay those expenses on a pre-tax basis by sponsoring a BASE® 125 Cafeteria Plan.
The goal of a Cafeteria Plan is to help your employees save three different ways:
A Cafeteria Plan enables you to transfer funds from your employee's paycheck each pay period on a tax free basis to an "account" that is earmarked for only that employee.
Since these funds are transferred from the employee's wages on a pre-tax basis, they are saving federal
and most state and local taxes on these dollars, as well as Social Security and Medicare Taxes.
All of these factors work in your favor as the employer, as well as in the favor of your employees. In
many cases, paying premiums, health care expenses and dependent care with pre-tax dollars will
increase your employees' take-home pay with no additional funds out of your pocket.
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