What guidelines and requirements are stated in Internal Revenue Code § 125?
To adopt a Section 125 plan, employers must prepare and maintain a written plan document. Participation is limited to eligible employees as defined by the plan document. Employers may make contributions on behalf of employees. Employee contributions must be made through salary reduction agreement. Also, the plan must meet Internal Revenue Code requirements for election, enrollment, and non-discrimination, and the employer may be required to file IRS Form 5500 annually.
