Why Create a Cafeteria Plan?
Quite simply, tax advantages accrue for both the employee and employer! In essence, employees reduce their income by an amount equal to the cost of the benefit. By reducing their income, they lower their taxable base; thereby reducing the amount they pay in Federal, FICA and (in most States) State income taxes. Conversely, when employees’ taxable income is reduced, FICA and FUTA payroll taxes paid by employers are also reduced. With the implementation of a Cafeteria Plan and utilizing the Cafeteria Plan Manager, most employers tax savings pay the software in the first month of operation.
