Section 125 Plans

Made possible by section 125 of the IRS code, these plans offer employers a way to save taxes on their group benefit plans and offer employees a way to save taxes on money spent out-of-pocket for dependent care and medical expenses.


Three types of Section 125 plans exist: Premium Only, Flexible Spending Accounts, and Full Cafeteria Plan. Money allocated to a Section 125 Plan is subtracted from the employee's taxable income. It is also free from employer-paid Social Security and Unemployment taxes.


Benefit plans may include:

  • Flexible contribution amounts
  • Plan documentation for employees
  • Weekly employee reimbursement cycle
  • Annual re-enrollment process