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ERISA Consultants |
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Over
20 years |
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WHAT IS A FLEX PLAN? |
Flex Plan also known as a flexible benefit plan,
cafeteria plan or a Section 125 plan is one of the most efficient employee
benefits packages available today. Flex Plans were established by Congress
in 1978 under Section 125 of the Internal Revenue Code. The Revenue Act of
1978 is the very same legislation that enacted the wildly popular In addition, the Transportation Equity Act for the 21st Century (known as TEA-21) initially established and adopted by the U.S. Congress in 1999 allows employers to offer to their employees a pre-tax fringe benefit for qualified transportation under Section 132. Technically, this type of benefit cannot be included in your Section 125 plan document. However, ERISA has the ability to administer your Section 132 benefits in tandem with your Section 125 benefits. Types of Flex Plans Flex Plans can take on three distinctive forms. Premium Only Plans Premium Only Plans, better known as "POP Plans," convert the employee’s cost of group insurance premiums from an after tax expense to a pre-tax expense via salary reduction. The premiums can be used for both the employee or dependent premiums. Flexible Spending Accounts Flexible Spending Accounts, also known as FSAs allow employees to contribute untaxed salary to one or both FSAs via salary reduction. A plan may include one or both a health care FSA and a dependent care FSA. The first FSA is for health care expenses not covered 100% by your insurance carrier. The second is for dependent care expenses (child and/or senior care) if both you and your spouse work full time. FSA plans typically include a POP plan as well. The reimbursement process is similar to an insurance claim process. As you or any member of your family incur expenses eligible for reimbursement simply fill out a claim form attach the receipt showing the expense, mail or fax it to our office, and the claim will be processed and the within 48 hrs of being received by ERISA Flex. Cafeteria Plan A cafeteria plan is a unique employee benefit package that may include both the two above plans as well as a variety of other benefits including; health, dental, vision, term life insurance to $50,000, long term disability, short term disability, vacation time, 401(k), and adoption expenses. The employer establishes a dollar value or credit that individual employees can use to buy the specific benefits from the menu that most suit their needs. If the employee does not use all of the credit specified by the employer the employee is entitled to take the excess credit as taxable income for the plan year. Qualified Transportation Plans: Employees can elect to pay for Qualified Transportation Expenses with tax-free dollars. Contributions which reduce taxable income are credited to an account. As the employee incurs eligible expenses, he or she may submit a claim for reimbursement. There are two types of accounts: Mass Transit Account - IRC Section 132(f)(5)(c) defines "qualified mass transit" as transportation in a commuter highway vehicle (ie. bus, train, subway, van pool) if such transportation is in connection with travel between the employee's residence and place of employment. Parking Account - IRC Section 132(f)(5)(c) defines "qualified parking" as parking provided to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work by transportation for which a transit pass is used, in a commuter highway vehicle, or by car pool. Such term shall not include any parking on or near property used by the employee for residential purposes.
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[Why
ERISA ?]
[Qualified Plans] [Section
125/132 Plans]
[ERISA Pay] [Professional
Advisors]
[ERISA Clients]
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