PACKAGES
Steps to Implement a Section 125 Plan
The purpose of this Package is to provide services in
designing and implementing a Section 125 Plan to meet our client's cost
reduction objectives.
Clarify Key Section 125 designs:
- What is a Premium Only Plan (POP)?
- What is a Flexible Spending Account?
- What is a full Cafeteria Plan?
Design Phase
Initially, we review your objectives to be achieved under the Section
125 Plan. Typical objectives include helping employees pay their costs
for medical premiums with pre-tax dollars, saving FICA taxes, and potentially
shifting the cost of medical benefits to other employers through the
use of an "opt out" provision. During this process we will also assist
in identifying the benefits to be included in the Section 125 Plan,
including premium payments, medical flexible spending accounts and dependent
care benefits. We may also discuss the interaction of your Section 125
Plan with any existing qualified retirement plans to coordinate the
definitions of compensation, and to explain other planning opportunities.
Education
After the design of the Section 125 Plan is finalized, we will work
with you in reviewing many of the general rules applicable to the Plan.
For example, we will explain the general administration of the Section
125 Plan, the "use or lose it rule", the ability of employees to change
their elections for "changes in family status" and the interaction of
a Section 125 Plan with the Federal Family and Medical act and other
laws and statutes, including COBRA.
Documentation of the Plan
- Plan Document. We will provide a Draft Section 125
Plan document incorporating all of the design features.
- Summary Plan Description. In addition to the Section
I25 Plan document, we will provide a Summary Plan Description ("SPD")
to help explain the terms of the program to employees.
- Tax Matrix. To further help understand the tax rules
regarding the Section 125 Plan, we will provide a Tax Matrix reviewing
the federal income tax, FICA tax, and state tax treatment of all employer
and employee contributions in all states in which employees exist.
- Election Forms. Lastly, we will provide standard Election
Forms.
