Section 125 Plans Explained: A Win-Win for Employers and Employees
A Section 125 plan, sometimes known as a tax cafeteria plan, is a benefits program available to staff members whereby they may select from a menu of pre-tax savings. These strategies have their main benefit in that they can lower taxable income. By devoting part of their income to benefits including health insurance, dependent care, and other qualified expenses, employees who participate in a tax cafeteria plan can save on federal, state, and Social Security taxes.
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