What is a § 125 Cafeteria Plan?
A Cafeteria Plan is a welfare plan specifically authorized by Section 125 of the Internal Revenue Code. It enables employers to provide employees with valuable benefits – where both the employer and employees save significant amounts on taxes. Allowable benefits include dependent care assistance programs (day care), uninsured medical expenses not covered by the typical group medical plan, group life and disability premiums otherwise paid by the employee, and contributions to 401(k) plans.
