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| How Does a Section 125 Plan Benefit Me? |
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| Written by John Villanueva |
| Saturday, 09 April 2011 09:11 |
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If you're a business owner, you likely wear lots of hats and are more involved in the nuts and bolts of your business than you are making sure your payroll and accounting are in compliance. For this reason, you might have decided not to bring about a Section 125 plan, opting not to be bothered with the hassle, and additional compliance regulations for you. But what you may not realize is that the benefits of sponsoring a Section 125 Plan may far outweigh the perceived "inconvenience" of setting up one. Tax Savings. A Section 125 plan, also called a cafeteria plan, lets you offer your employees the ability to pay for benefits on a pre-tax basis. For instance, if a cafeteria plan offers health insurance, then the premium for this is paid using pre-tax dollars. Because of this, the costs for Federal withholding, FICA, Medicare, and even state taxes that employees pay for is also significantly reduced. Great for the employee, but also great for you; the lower taxable income translates into lower employer matching shares of FICA and Medicare taxes, and lower FUTA. Dependent upon the state where you're located, this might also translate into lower State taxes, too. Boost in Employee Morale. With the decrease in taxable income, the employee essentially gets a pay raise at practically no cost to the employer. The employee pays their respective portion of the premiums for the insurance, but because he does it with pre-tax dollars, it represents a discount of the regular price. The cafeteria plan allows the employer to offer to employees, on a pre-tax basis, benefits that the employer could not otherwise afford; this makes those coverages less expensive for your workers. The range of benefits that you can offer through a cafeteria plan is extensive. For example, with a cafeteria plan, you can offer employees the ability to pay their premiums pre-tax through the plan for coverage of health, dental, life and other ancillary coverages. The best thing about it is that the employees can see that the company is seriously concerned about their welfare, simply by making the effort to sponsor the plan . Attractive Employer Incentive. In this economy all employers are looking for creative ways to stretch their resources and top talent is hard to find. Competition for getting highly-qualified employees is also fierce and employers can use all the advantages they can offer. Most employers require employees to pay some portion of their benefits and by sponsoring a POP Section 125 Plan you can help increase your employees take home pay with very little time and investment. About the Author: Visit our site and learn more about Section 125 benefits you can take advantage of! You'll find out just how much you stand to save as well as discover a secure and cost-effective way of getting your POP Plan document ready and updated all the time. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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