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 The best of both worlds for the Employer & Employee

A section 125 plan is an employee benefit plan, authorized by Section 125 of the Internal Revenue Code, which allows employees to redirect a portion of their salaries into the plan on a PRETAX basis. This can provide significant tax savings for both the employee and employer.

Through a simple payroll deduction, your employees can pay for the following on a PRETAX basis.

  1. Dependent Care Expenses such as child care or adult dependent care.
  2. Unreimbursed Health Expenses such as deductibles and coinsurance, medical and dental expenses.
  3. Group Insurance Premiums (Premium Plan) includes medical, dental disability and term life.

Potential Benefits for Employer & Employee

Employer Benefits

  • Reduction of payroll related costs
  • NO Social Security Taxes (FICA)
  • NO Medicare Tax
  • Lower Workers' Compensation Premiums (check with your carrier)

Employee Benefits

  • Reduction of payroll related costs
  • NO Social Security Taxes (FICA)
  • NO State Income Tax
  • NO Federal Income Tax
  • NO Medicare Tax
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with professional advice. Information is subject to change without notice.
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